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emc011075
emc011075, Tax adviser
Category: Tax
Satisfied Customers: 2650
Experience:  IRS licensed Enrolled Agent and tax instructor
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I just recently was off from my job after four years.

Customer Question

I just recently was laid off from my job after four years. I started my new job and my plan was to start my new job and have a small amount of Federal income tax taken from my check. My previous job only withdrew $4.82 of Federal Income tax from my check all year. My new job has already withdrawn $205 in two weeks. I followed the instructions on the W4 and tried to maximize my deductions but it still is too high. How can I reduce my withholding/
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Submitted: 10 months ago.
Category: Tax
Expert:  emc011075 replied 10 months ago.
Hi. My name is ***** ***** I will be happy to help you. Your W4 determine your withholding rate. The more exemptions/allowances you claim the less taxes are withheld from your paycheck.
Expert:  emc011075 replied 10 months ago.
You can use this online IRS calculator or the W4 worksheet to figure out how change your it to avoid underpayment penalty for low withholding. https://www.irs.gov/Individuals/IRS-Withholding-Calculator
Expert:  emc011075 replied 10 months ago.
any questions?
Customer: replied 10 months ago.
I understand that however I have tried to put down the maximum number of deductions and still their taking money out of my pay stub. I know at the end of the year I'm going to get back all the money but I do not want the IRS to hold onto $5000 or more of my money until next year. I have a lot of deductions and three children in College. I will get the college credit ($2500) for two of the children in college
Customer: replied 10 months ago.
I tried the IRS calculator and it wants me to put less allowances.
Customer: replied 10 months ago.
Did you see my question
Expert:  emc011075 replied 10 months ago.
How many allowances you are currently claiming? Some of the education credits are refundable, which means you cannot compensate for it with less withholding.
Expert:  emc011075 replied 10 months ago.
How much is your total annual income?
Customer: replied 10 months ago.
My annual income is about $72000 and my wife about $25000. My allowance on my current W4 is 8. How come my previous employer withdrew only $4.52 all of last year.
Expert:  emc011075 replied 10 months ago.
Your withholdings are determined by your w4. You must changed it with your current employer Are you claiming as married but withheld at higher single rate?
Expert:  emc011075 replied 10 months ago.
Do you make the same as you made by your last employer?
Customer: replied 10 months ago.
Yes about the same. I'm looking at acopy of the W4 that I filled out how would know if I claimed married or single?
Expert:  emc011075 replied 10 months ago.
look at the actual certificate on line 3
Customer: replied 10 months ago.
Looking at line G-Child tax credit on my W4 I have zero. I have four children and our family salary is under $119000. Could that be the difference? I how married on line 3
Expert:  emc011075 replied 10 months ago.
If you filled out your w4 exactly the same way for both employees and they withhold at different rate than one of your employer didn't or is not using the withholding tables and only take out set percentage for everybody. Your current employer is taking out about 7.5% and you are in 15% tax bracket. How old are your children?
Customer: replied 10 months ago.
I started working for the old employer over 4 and a half years ago so I do not recall what I filled out previously. My children are between 17 and 22 years of age.
Expert:  emc011075 replied 10 months ago.
Than you do not qualify for any child tax credit. The education credit give you $5000. Let me do a quick calculation.
Expert:  emc011075 replied 10 months ago.
Your total estimated taxable income is 60,400. Assuming 4 dependents, 2 college students and standard deduction your total tax is $8150. Minus $5000 education credit you are looking at $3150 of taxable liability. It means that between you and your spouse you need to have withheld at least $2900 to avoid underpayment penalty.
Customer: replied 10 months ago.
My total tax last year was $3319. My federal tax withheld was $3481 and my American Opportunity credit was $2000 ($5481). I received a refund of $2162. I already have almost $3000 withheld.
Customer: replied 10 months ago.
My taxable income last year was $48274.
Expert:  emc011075 replied 10 months ago.
You said your new employer took 205 in two weeks. How can you have already 3K withheld?
Expert:  emc011075 replied 10 months ago.
American opportunity credit is 2500 per child? Why you didn't get full credit?
Customer: replied 10 months ago.
When I was laid off from my previous job I received one month of severance and they withdrew %25 ($1359) of my final two checks. also, my wife is having federal withheld from her check weekly (estimate $1600 Year to date).
Customer: replied 10 months ago.
I believe I did. On my 1040 form I received a credit (line 50-education credit-$3000) and a credit on (line-68- American Opportunity credit=$2000).
Expert:  emc011075 replied 10 months ago.
I see. Your new employer will not account for the severance pay. That's why. Otherwise your withholding would be just about right. Unfortunately in your tax bracket you must have minimum withheld. You cannot claim exempt. You can claim couple more allowances but keep in mind that if you claim more 10 your employer will have to report it to IRS.
Expert:  emc011075 replied 10 months ago.
Scratch the last sentence. Not any more. Employers must submit w4 only if IRS specifically request it.
Customer: replied 10 months ago.
Based on $95000 per year how much less will be deducted from Federal on my paycheck for each additional allowance
Expert:  emc011075 replied 10 months ago.
Ok. Do you contribute to 401k and how much. How much do you pay for medical insurance every week?
Customer: replied 10 months ago.
I'm sorry based on $72000 per year
Customer: replied 10 months ago.
It was $160.77 with 8 allowances in this last paycheck.
Expert:  emc011075 replied 10 months ago.
What was 160.77?
Customer: replied 10 months ago.
Federal witholding
Customer: replied 10 months ago.
My gross was $2884.62
Expert:  emc011075 replied 10 months ago.
Do you make any contributions to 401K? If yes, what's the percentage? How much do you pay weekly for your medical? I need to know if you want me to calculate your withholding.
Customer: replied 10 months ago.
It is easy now because I do not have any 401k or medical deductions
Expert:  emc011075 replied 10 months ago.
If I increase your withholding to 9, you fed tax will be 137.40
Expert:  emc011075 replied 10 months ago.
With 10, $114
Expert:  emc011075 replied 10 months ago.
http://www.paycheckmanager.com/FreeCal/free_payroll_calculator.aspx Here's the calculator.
Customer: replied 10 months ago.
Ok . Thank you for your help. Now I have a good plan.
Expert:  emc011075 replied 10 months ago.
You're welcome. Is there anything else I can help you with today?
Expert:  emc011075 replied 10 months ago.
I run the calculation assuming you are being paid every two weeks, not twice a month. If you are being paid twice a month the calculation will be little different maybe by $5And if this answered your question, please take a moment to rate my response so that I may receive credit for assisting you today. You find the rating bar on the top of the page – 5 stars. However, if you need clarification, or want to discuss this issue further, let me know. Thank you.
Customer: replied 10 months ago.
no thank you vey much
Expert:  emc011075 replied 10 months ago.
I am glad I could help. And if you found my answers helpful, a Positive Rating would be greatly appreciated. Thank you.