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Old Jan 11, 2012, 01:13 PM   #1
puma1552
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Married, claim zero, they only take out 7.6% for federal taxes??

So I just got my first pay stub at my new job. I have always claimed zero to get a big return because I'd rather have a windfall every year than a huge bill (save the "don't give the govt. an interest free loan!" argument for another time, not interested in going there this time). I did get married in the past year, which I know makes a big difference in my favor.

So, on my W4 I claimed 0 for number of dependents (Line D: http://www.irs.gov/pub/irs-pdf/fw4.pdf ), and filled out the allowances (Lines A-C) as described by each line.

But, looking at my check stub, they only withheld a paltry 7.6% for federal taxes?!? And for state, just 3.5%!

This is all well and good, but I do not want to have to pay in a large sum at the end of the year.

Additionally, next to the state/federal withholding on my check stub, it says "Filing Status: M4" and I'm not sure what that means but I'm sure it has to do with the withholding.

FWIW, on the W4, I entered "1" on each of lines A, B, and C, as each line's instructions said to do. However, in the basic instructions above, it says you can claim zero allowances as well...should I have just zeroed out all of the lines?

I was under the impression all these years that claiming zero just referred to dependents, but is it dependents and allowances? It's been years since I've had to fill out a W-4.
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Old Jan 11, 2012, 01:15 PM   #2
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Old Jan 11, 2012, 01:19 PM   #3
puma1552
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Please let's keep it out of there, it really has nothing to do with the rights and wrongs of the tax system. I just wanted to know if I didn't actually claim true 0.
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Old Jan 11, 2012, 01:22 PM   #4
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Talk to your HR department and ask them what's going on. They should be able to help you.
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Old Jan 11, 2012, 01:22 PM   #5
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If you are single and have more than one job or are married and you and your spouse both work and the combined
earnings from all jobs exceed $40,000 ($10,000 if married), see the Two-Earners/Multiple Jobs Worksheet on page 2 to
avoid having too little tax withheld.
When you get married, you need to withhold even more than a zero deduction as a single person.
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Old Jan 11, 2012, 01:24 PM   #6
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Yes, the IRS also says that, if your partner works, this may cause you to have insufficient withholding:

http://www.irs.gov/pub/irs-pdf/p919.pdf

Right column, p. 4. Notes working >1 jobs can result in this as well.
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Old Jan 11, 2012, 01:27 PM   #7
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Partner doesn't work FTR.
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Old Jan 11, 2012, 01:31 PM   #8
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Partner doesn't work FTR.
Huh, and you work just one job that is a normal source of wages/salary? Do you get overtime pay? I've never honestly completely understood how this works. You may have to add additional withholdings on your W4, though, to get what you want.
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Old Jan 11, 2012, 01:38 PM   #9
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Huh, and you work just one job that is a normal source of wages/salary? Do you get overtime pay? I've never honestly completely understood how this works. You may have to add additional withholdings on your W4, though, to get what you want.
Yes, and no. Salaried engineer. Brought my wife home from Japan a few months ago, she's going to be going to school so for now I'm the sole earner.

Unfortunately my company doesn't have a true HR department, just an admin lady who isn't always sure how to handle stuff.

EDIT: I just filled out a new W4 and didn't even bother with the worksheet, I just went straight to line 5 and entered 0. I think before I must've had 3 on that line, which is duffing everything up.
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Old Jan 11, 2012, 01:52 PM   #10
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i "lose" 56% of my pre-tax income. "lose" is used very loosely.
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Old Jan 11, 2012, 02:01 PM   #11
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Not from USA. What does "claim 0" mean?
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Old Jan 11, 2012, 02:02 PM   #12
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Originally Posted by puma1552 View Post
So I just got my first pay stub at my new job. I have always claimed zero to get a big return because I'd rather have a windfall every year than a huge bill (save the "don't give the govt. an interest free loan!" argument for another time, not interested in going there this time). I did get married in the past year, which I know makes a big difference in my favor.

So, on my W4 I claimed 0 for number of dependents (Line D: http://www.irs.gov/pub/irs-pdf/fw4.pdf ), and filled out the allowances (Lines A-C) as described by each line.

But, looking at my check stub, they only withheld a paltry 7.6% for federal taxes?!? And for state, just 3.5%!

This is all well and good, but I do not want to have to pay in a large sum at the end of the year.

Additionally, next to the state/federal withholding on my check stub, it says "Filing Status: M4" and I'm not sure what that means but I'm sure it has to do with the withholding.

FWIW, on the W4, I entered "1" on each of lines A, B, and C, as each line's instructions said to do. However, in the basic instructions above, it says you can claim zero allowances as well...should I have just zeroed out all of the lines?

I was under the impression all these years that claiming zero just referred to dependents, but is it dependents and allowances? It's been years since I've had to fill out a W-4.
It might be a good idea to talk to an actual accountant, or if you really want to scrape the bottom of the barrel, a tax lawyer.

( no offense to those tax lawyers out there - just a little levity to lighten the mood)
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Old Jan 11, 2012, 02:05 PM   #13
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Originally Posted by neiltc13 View Post
Not from USA. What does "claim 0" mean?
In the US, taxes are withheld at the paycheck for most workers. When you start a job, you fill out a worksheet that uses variables like how many people are your dependents and whether you are married, working multiple jobs, etc. The purpose is to roughly estimate your taxes, and then that amount is withheld, so that you will already have paid most / all of your taxes by the time your tax form is due.

Claiming zero just means you don't claim any of the major things (dependents, etc) that would cause you to pay less taxes, so you make the worst-case assumption of how high your tax burden will be.
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Old Jan 11, 2012, 02:07 PM   #14
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EDIT: I just filled out a new W4 and didn't even bother with the worksheet, I just went straight to line 5 and entered 0. I think before I must've had 3 on that line, which is duffing everything up.
That's all I do. There's also a check box to direct the IRS to use the single withholding even if you're married.

The lower the withholding number the more taxes will be taken out. I'm married with 2 kids and I change mine between 2 to 4 depending on how I want the taxes deducted.
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Old Jan 11, 2012, 02:14 PM   #15
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That's all I do. There's also a check box to direct the IRS to use the single withholding even if you're married.

The lower the withholding number the more taxes will be taken out. I'm married with 2 kids and I change mine between 2 to 4 depending on how I want the taxes deducted.
Yeah, the last time I filled one out was probably close to a decade ago, and I think the HR lady just asked what I wanted to claim and took care of it, I don't remember ever doing any worksheet.

I think I'll try just submitting this W4 and see how much they take...kinda sucks to have to wait a bit longer, hard to plan a budget without knowing my net income.
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Old Jan 11, 2012, 02:17 PM   #16
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hard to plan a budget without knowing my net income.
I used to have a spreadsheet that computed your net income based on your withholding. Its been so long, its now out of date how ever.
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Old Jan 11, 2012, 02:46 PM   #17
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I use this site to calculate my net pay: http://www.yourmoneypage.com/withhold/fedwh1.php
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Old Jan 11, 2012, 02:56 PM   #18
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I use this site to calculate my net pay: http://www.yourmoneypage.com/withhold/fedwh1.php
Wow, that's good--it got my SS and Medicare to the penny. That gives a good estimate sans state taxes, thanks.

EDIT: Just saw the state option, even better.

Double edit: Seems even in the worst case scenario, federal withholding will only be 11.3% and state 5.6%...still seems optimistic, AFAIK I'm in the 15% tax bracket.

Last edited by puma1552; Jan 11, 2012 at 03:04 PM.
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Old Jan 11, 2012, 03:00 PM   #19
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On the W-4 just go to the section where is asks if you want to withhold any addition money per week and add an amount that you can live with. I used to add 100 for an additional 5200 a year withholding.
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Old Jan 11, 2012, 03:29 PM   #20
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to be fair. when i lived/worked in the US, was married I only "lost" about 8% of my income in federal income taxes. I had a lot of deductions, so it's not so far off.
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Old Jan 11, 2012, 03:45 PM   #21
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Suppose that your annual salary is $50000 and you are married, and that is your only income.

If you take the standard married deduction and exemption of $19000 then your taxable income will be $31000

now, the first $17000 is taxed at 10% and the rest at 15% so that means you owe: .1*17000 + .15*(31000-17000) = $3800

$3800 in tax on an income of $50000 = 7.6% which is what you said they are withholding. So if your income if $50000 they are withholding about the right amount.
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Old Jan 12, 2012, 01:18 AM   #22
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If you are overly worried you can check the "married but withhold at the single rate" box and then claim 0. That is the max amount they will take without you telling them to take more every check (the box that specifies additional voluntary withholding).
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Old Jan 12, 2012, 07:27 AM   #23
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Seek help from a tax professional, CPA, etc. Don't rely on answers here. There are tools online where you can plug in data and find out your net pay and how much you're paying in taxes and such; however, if you want to ensure you're doing everything correctly then you should speak to someone who is skilled in this area. If you go to a place like H&R Block or the likes make sure the person you're speaking to is not seasonal.

Quote:
Originally Posted by puma1552 View Post
Yes, and no. Salaried engineer. Brought my wife home from Japan a few months ago, she's going to be going to school so for now I'm the sole earner.

Unfortunately my company doesn't have a true HR department, just an admin lady who isn't always sure how to handle stuff.

EDIT: I just filled out a new W4 and didn't even bother with the worksheet, I just went straight to line 5 and entered 0. I think before I must've had 3 on that line, which is duffing everything up.
Never mind the HR department. Even the largest companies' HR departments can be unhelpful to you.
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Originally Posted by Shrink View Post
It might be a good idea to talk to an actual accountant, or if you really want to scrape the bottom of the barrel, a tax lawyer.

( no offense to those tax lawyers out there - just a little levity to lighten the mood)
This. This issue is going to bite you in the butt if you don't talk to someone who actually knows what they're doing.

Quote:
Originally Posted by e˛Studios View Post
If you are overly worried you can check the "married but withhold at the single rate" box and then claim 0. That is the max amount they will take without you telling them to take more every check (the box that specifies additional voluntary withholding).
Notwithstanding, this is a wonderful place to start. If you do just one thing, do this.
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Old Jan 12, 2012, 10:35 AM   #24
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Thanks, I went ahead and just checked the regular married box and wrote zero on line 5 and sent it up the chain, that should take care of it.

Appreciate the replies.
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Old Jan 12, 2012, 11:28 AM   #25
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If you are overly worried you can check the "married but withhold at the single rate" box and then claim 0. That is the max amount they will take without you telling them to take more every check (the box that specifies additional voluntary withholding).
This is what I do. Since I freelance, I have a mixture of W2 and 1099 work (about 3-5 employers of each). I claim "Married but withhold at the higher single rate" and put a zero on every line of the W4, no matter what the "actual" answer is. For some employers, I also have extra taken out. This means I get the most taxes possible taken out of my W2 paychecks, to offset the extra taxes involved with the 1099s. Even with that, I still owe at the end of every year.
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