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What is the avg. tax return for an income of $130,000?

Customer Question
How much tax should I...

How much tax should I withhold on a gross salary of $130,000?

Submitted: 9 years ago.Category: Tax
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12/12/2008
Tax Professional: Ed Johnson, Tax Preparer replied 9 years ago
Ed Johnson
Ed Johnson, Tax Preparer
Category: Tax
Satisfied Customers: 10,760
Experience: GPHR Cert; U.S. Treasury Tax Advocacy Panel appointee
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Can you tell me your filing status?

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Customer reply replied 9 years ago

My filing status is married joint return.

Tax Professional: Ed Johnson, Tax Preparer replied 9 years ago

I am still not clear on what you are asking here. As I look at this, I do not know if you mean how much you as an employer have to withhold, or how much you as an employee has to put on the form W-4.

I appreciate your patience as we gather enough information to provide the very best and most accurate answer for you.

The U.S. tax system is complicated.

For example:

In order to advise about a W-4 so you would know what to tell to your employer, I would need not only the number filing status, but:

  • number of other dependents in addition to your spouse
  • whether or not your spouse worked
  • amount of 401(k) contributions in percentage or dollar amount
  • If you have and the amount of any mortgage insurance, property taxes, and mortgage interest.

Based on the information so far, on a W-4 form, you would claim married and 3 exemptions. REFERENCE: http://www.irs.gov/pub/irs-pdf/fw4.pdf

you can get a more accurate number if you complete all lines in the form as instructed.

If you are employer wanting to know what the paycheck looks like, a more accurate picture can be had if I also know the city and state. IN the meantime, federal should look like this:

Assumption: on w-4 claiming married and 3 exemptions:

<table border="0" cellspacing="0" cellpadding="1">

Tax Year

2008

Gross Pay

$130,000.00

Pay Frequency

Bi-weekly

Federal Filing Status

Married

# of Federal Exemptions

3

Additional Federal W/H

$0.00$0.00

Your Pay Check Results

Bi-weekly Gross Pay

$5,000.00

Federal Withholding

$795.00

Social Security

$310.00

Medicare

$72.50

Net Pay

$3,822.50
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Customer reply replied 9 years ago

Okay, here's the deal. This will be a brand new job beginning 1/2/09. (currently I am a 1099 employee with a LLC.) No other dependents, spouse did not/will not work but we do file joint returns. Not sure if I will be able to participate in 401k in the 1st 12 months of this job. So let’s just say zero for now. Property Taxes and mortgage interest should be in the neighborhood of about 30k. Oh and to complicate matters I am a NYC resident but will be working in Weehawken NJ so I suppose there is some Jersey tax that I will need to pay? What I am trying to do is figure out the least amount to withhold without having to pay the IRS at the end. Thanks!

Tax Professional: Ed Johnson, Tax Preparer replied 9 years ago

1. According to my calculations using form W-4, you would be able to make 8 deductions on the W-4. (Federal)

2. Because NJ and NY do not have a reciprocal income tax agreement, you will be required to file in NJ as a Non-resident, and in NY as a resident. You pay no NYC tax. File in NJ first, to get any refund of overpayment, and then file in NY as a resident, and NY will give you credit for taxes paid to NJ. By federal law you cannot be double taxed, but you may have to make a payment based on differences in tax rates to NY.

Based on that, then you will take withholding in NJ.

8 Exemptions on the W-4 will most likely put you in a refund position because you are missing a lot more information. I know you would like me to figure it for you. But really, the W-4 form is really accurate and you should use that.

The Federal W-4 is here: http://www.irs.gov/pub/irs-pdf/fw4.pdf

The NJ form is here: http://www.state.nj.us/treasury/taxation/pdf/other_forms/git-er/njw4.pdf

You can use this withholding calculator to determine it. It will even let you print a personalized W-4. But caution, it is a 2008 form. You should wait until the IRS makes the 2009 forms available. You can use the 2008 form, but employers may get confused and require a 2009 form. Just transfer the information to the 2009 form when they become available in early January.

http://www.paycheckcity.com/w4/w4instruction.asp

Ed Johnson
Ed Johnson, Tax Preparer
Category: Tax
Satisfied Customers: 10,760
Experience: GPHR Cert; U.S. Treasury Tax Advocacy Panel appointee
Verified
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Customer reply replied 9 years ago

Thank you very much!

Tax Professional: Ed Johnson, Tax Preparer replied 9 years ago

You are welcome. Thanks for your comments and feedback.

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