Lets talk 2018 Withholding Tables

[Thrif-t]

So everyone is all a buzz about the change in withholding in our paychecks and worrying about owing next year at tax time, so I decided to look at the new withholding tables https://www.irs.gov/pub/irs-pdf/n1036.pdf.

But I'm not sure if I really know how to figure this out? So tell me if my logic is right:

I take my gross income(looking at my recent pay stub), minus all my non taxed items like 401k etc, then I look at this withholding table and figure out how many allowances I now claim, which for me is 3, and I get paid twice a month so semi-monthly, so do I figure 3x172.90 (from the link of one withholding paying semi monthly)which equals 518.70. Subtract 518.70 from my pay figure above and then find that number on the chart to figure out how much SHOULD be coming out of my pay so I will have satisfied my tax obligation?

Or am I totally off on how I'm thinking this through, anyone know?

[Like2Plan]

Thrif-t,

Keep in mind that the tax withholding tables only track for one income. So, if you are a dual income family or if you have another source of income--then, no, it will not necessarily satisfy your tax obligation.

[Thrif-t]

Yes I realize that. Would it not work to do the same with my DH's pay? Is the way I'm figuring it correct?

[Like2Plan]

Yes I realize that. Would it not work to do the same with my DH's pay? Is the way I'm figuring it correct?

No--it wouldn't work out right.

Let's look at a hypothetical case for 2018 married filed joint (I'm going to ignore deductions).
0-19050 10% 10%
19051-77400 12% $1,905.00 + 12% the amount over 19050
77401-165000 22% $8907 + 22% the amount over 77400

In this case lets say, the DH earns $77400 and $8907 is withheld from the paycheck. And, the DW also earns $77400 and $8907 is withheld.
$17,814 is withheld in all.

But, the tax liability for both incomes ($154800) would be $8907 plus 22% of the amount over 77400 or $25,935.

[Like2Plan]

The previous example was pretty extreme.
While I think it would still be off if the total income put the family into the 12% bracket---it might not be that far off... a difference of 10% vs 12% for the second income.

[Gailete]

I haven't even seen one of those charts since I went to using software for doing my taxes. It always seemed cut and dried, but that was a long time ago!

[Thrif-t]

I found this: https://www.doughroller.net/taxes/fe...mption-limits/

I can figure out this math easier. I'm taking our Adusted gross income and subtracting the 24k standard deduction for next year plus I believe we get a $500 credit for each of our 3 college kids so subtract the $1500 and then go back to these tables. From there I can work backwards to see if the amount taken out of our paychecks will cover our taxes and if not well then I'll have to adjust.

[Radiohead1]

Where can we find a form W-4?

[creditcardfree]

Where can we find a form W-4?

IRS website...may not yet be updated for 2018 taxes. Also check with your employer.

[Gailete]

Human resources at your job, or whoever is in charge of payroll should have W-4.

[creditcardfree]

Where can we find a form W-4?

I saw you were on another thread and someone pointed out you could change your withholding. You may want to look at Paycheckcity.com to use their paycheck calculator. You can keep changing the withholding to make the adjustment in the direction you need. Then, of course, file the W4 with your employer to make the change.

[txex86]

The IRS will have a new withholding calculator in their website by the end of February. I would wait until then and use it to determine if you should change your withholding.