Tax Witholding

dragonstarjk · January 2016

Quick question--what does everybody do for tax withholding? I am pretty sure H claims 1 and I claim 0. We are DINKS.

Last night I was working on our taxes. H&R Block calculates what you owe/refund as you go, so when I entered H's W-2, the refund was sitting at $3200. By the time I put my W-2 in, we owed $74. Now, I do NOT want a large refund; I want to be as close to zero as possible so I am getting more money in each paycheck. However, I really don't want to worry about owing taxes, so I would rather adjust my withholding to get a refund than end up owing money.

Just wondering what everybody else's philosophies are on this. I am leaning towards changing my withholding to claim 1.

Edit: I just checked and I am claiming 1 currently. Now I need advice on what we should be doing!

als1982 · January 2016

We personally like getting a refund. I'd rather get a chunk at the beginning of the year which we can allocate to whatever goal we're working, than have a few extra dollars every pay check. For us, it's a nice psychological boost to kick start the new year.

Mustard76 · January 2016

We (fellow DINKs) each claim 0 and still end up owing taxes every year. It's infuriating to write that check every year after 0 withholdings. So basically, I'm no help but wish you the best of luck. Ugh. I hate tax time. Haha.

julieanne912 · January 2016

DINKs here too... I claim 3, I'm not sure what H claims. I'd rather pay a bill than have less money per paycheck, especially since it's not gaining interest or anything.

A couple years ago I was a w2 at the same salary I'm at now, although I had less pre-tax deductions (that job didn't have insurance or 401k). I claimed 3 back then and ended up having to pay around $900.

jtmh2012 · January 2016

I'd suggest starting here....

IRS Withholding Calculator

dragonstarjk · January 2016

Mustard76 said:

We (fellow DINKs) each claim 0 and still end up owing taxes every year. It's infuriating to write that check every year after 0 withholdings. So basically, I'm no help but wish you the best of luck. Ugh. I hate tax time. Haha.

Darn it! I just changed mine to 0. H is probably 0 as well. I think I was confused about how it worked, but I understand now. I wouldn't be surprised if we end up in the same boat as you in a couple of years, if my salary continues to increase--which of course I hope it does!

brij2006 · January 2016

This will be our first year filing with a child. But we always both claimed 0 and received about a $3,000 refund. I have a bunch of 1099'd income, so we wanted to try and avoid owing.

Now I claim 0 and H just switched his to 1. We no longer want a return. Especially since we live in Illinois and they are now not paying any refunds out until April because they don't have any money. Yeah, I'll take more money in my check then. Thank you very much.

cbee817 · January 2016

Do you have deductions that still need to be added? We're 1 for Federal, 0 for State but also have 2 kids (both in day care for the better part of 2015), mortgage, 529 plans (state gives us a break on those). I like a smaller return- we usually put it into our vacation fund. Last year was our largest we've ever had: $1,982 from both. We usually owe the state, but the 529 plans helped quite a bit ($700 from that).

Mustard76 · January 2016

brij2006 said:
This will be our first year filing with a child. But we always both claimed 0 and received about a $3,000 refund. I have a bunch of 1099'd income, so we wanted to try and avoid owing.

Now I claim 0 and H just switched his to 1. We no longer want a return. Especially since we live in Illinois and they are now not paying any refunds out until April because they don't have any money. Yeah, I'll take more money in my check then. Thank you very much.

Is this for real? We lived in MO most of 2015, but this is just one more reason to regret moving back to IL. We're such a financial mess in this state.

brij2006 · January 2016

Mustard76 said:

This will be our first year filing with a child. But we always both claimed 0 and received about a $3,000 refund. I have a bunch of 1099'd income, so we wanted to try and avoid owing.

Now I claim 0 and H just switched his to 1. We no longer want a return. Especially since we live in Illinois and they are now not paying any refunds out until April because they don't have any money. Yeah, I'll take more money in my check then. Thank you very much.
Is this for real? We lived in MO most of 2015, but this is just one more reason to regret moving back to IL. We're such a financial mess in this state.

Well they're now saying they won't pay out before March 1st, but we all know how IL is. Supposedly they will "process" them on March 1st and it will take 2-3 weeks to receive your return. That's been the latest update.

H works across the border in Iowa. It's beginning to look even better to move there.

Xstatic3333 · January 2016

Last year we both claimed Married 1, and ended up owing over $2,000. We are dinks with close-to-equal taxable incomes, and I had two 1099 side jobs. We immediately both switched to Single 0 in a panic. I never want to owe that much againMidway through the year, though, I switched back to 1 when we needed cash flow for H's dental work. Hoping it will end up ok, but we're waiting on an annoying stock form and can't file until mid-February. My ideal would be to break even.

short+sassy · January 2016

No kids. I claim 1 and my H didn't have a job last year, so n/a for him. But I also have both 1099 income and rental income. I don't pay taxes for any of that income over the year, though there are a lot of expenses I can deduct, so I always have a HEFTY amount of taxes due. Not always, but sometimes I've even had to pay a small penalty because not enough was withheld

I've debated about changing my withholdings to 0 or talk to an accountant on how to set up quarterly tax payments for my non W-2 income. But then, there is something to be said to pay my HELOC down with extra money over the year...saving myself 4.9% interest on the amount...keeping in mind and planning for the tax bill I will have when I file.

hoffse · January 2016

DINKS. I claim 0, H has his taxes withheld at the single rate, which is even higher. We do it this way because I'm paid bi-weekly, but he's paid twice a month. Our paychecks are within a few hundred bucks of each other this way, and then I get two "extras" throughout the year.

My ideal situation is to get a $100 refund from the feds and a $50 refund from the state. That way I don't have to write them a check, and we get enough for a nice dinner, but I'm not giving them a significant interest-free loan through the year.

We way overwithheld in 2015 because I didn't know how my LLM reimbursements would be treated. The result is we're getting a really big refund. Psychologically that's exciting right now. But I mean, I got so stressed out last year when we were trying to make things come together with our remodeling and stuff that it would have been MUCH better if that money had been in our paychecks.

The other thing is that so many people's refunds are getting stolen these days, that I think it's better to plan only a small or no refund than getting thousands of dollars back. That's just me though.

I use the withholding calculator that PP posted above, and it looks like we're going to be within $200 for 2016, and the exact amount is going to depend on our charitable contributions. That's close enough for me.

hoffse · January 2016

Xstatic3333 said:

Last year we both claimed Married 1, and ended up owing over $2,000. We are dinks with close-to-equal taxable incomes, and I had two 1099 side jobs. We immediately both switched to Single 0 in a panic. I never want to owe that much againMidway through the year, though, I switched back to 1 when we needed cash flow for H's dental work. Hoping it will end up ok, but we're waiting on an annoying stock form and can't file until mid-February. My ideal would be to break even.

Your bank might have those forms online already. Fidelity said theirs wouldn't be ready until mid-Feb, but all of ours appeared online last week.

jtmh2012 · January 2016

Xstatic3333 said:

Hoping it will end up ok, but we're waiting on an annoying stock form and can't file until mid-February. My ideal would be to break even.

I'm in the same boat and the ones I need aren't available online.

dragonstarjk · January 2016

No other income; I have everything done except H's student loan interest and it looks like we will be getting a $300ish refund. So, that's close enough to zero for me; I think I'll try it with the new withholding amount for a few paychecks, and if it's making too big of a dent in my take home pay I'll switch it back. Like I said, I'm okay with a small/no refund, but I'm kind of scared of ending up with a $2K bill like @xstatic! This is the first year that we've been close, but our refunds have been getting smaller and smaller each year, and this is the last year I will have deductions for my home business since I stopped doing it.

Xstatic3333 · January 2016

hoffse said:

Xstatic3333 said:

Last year we both claimed Married 1, and ended up owing over $2,000. We are dinks with close-to-equal taxable incomes, and I had two 1099 side jobs. We immediately both switched to Single 0 in a panic. I never want to owe that much againMidway through the year, though, I switched back to 1 when we needed cash flow for H's dental work. Hoping it will end up ok, but we're waiting on an annoying stock form and can't file until mid-February. My ideal would be to break even.

Your bank might have those forms online already. Fidelity said theirs wouldn't be ready until mid-Feb, but all of ours appeared online last week.

I wish :-( Fidelity is the best! The form I need is from that obscure energy stock that I was given my by grandpa as a baby. I just logged into the account, and last year they didn't even make it available online until February 13, two days before we're required to have it. I wonder if it's worth getting our tax stuff to our accountant but telling him to wait on the form to finalize everything. I know it's unusual to use an accountant but existing in two states makes us complicated.

vlagrl29 · January 2016

I have no idea honestly since we are self employed. Personally my view is to not owe or get a refund. A bigger refund really just means you could have had that money over the year.

lbonga1 · January 2016

I forgot to change my withholdings after I had my kids and ended up with a $6k+ refund...whoops. I should be claiming 7 (head of household with two kids) according to the w-4 form. It seems like a lot of allowances to claim, so it makes me nervous. I had a bunch of weird changes this year, though, so I'm not sure how it's all going to work out. I'm waiting for my w-2 from my previous employer; they always mailed it out on Jan. 31.

smerka · January 2016

Illinois is claiming that they are holding refunds for identity theft reasons and has nothing to do with the budget clusterf*ck. There are other states doing it too but I am not sure I believe anything that comes out of Springfield. The nice thing is that IL has a flat tax so there usually isn't a huge swing one way or the other.

JoanE2012 · January 2016

als1982 said:

We personally like getting a refund. I'd rather get a chunk at the beginning of the year which we can allocate to whatever goal we're working, than have a few extra dollars every pay check. For us, it's a nice psychological boost to kick start the new year.

This. I know it's not the smartest thing to do and there's risks - but I can't help it. I'd rather get a nice, fat refund. Between claiming 0, the mortgage interest deduction, and the insane amount of property taxes we pay, it's a huge boost.

BlueBirdMB · January 2016

I would always rather owe than get a refund. Refunds are giving the government an interest free loan and it irks me on every level. Owing $74 is pretty close to breaking even. It's hard to break completely even it seems. We don't have state income tax, so that's cool and we don't have to worry about owing two parties.

vlagrl29 · January 2016

BlueBirdMB said:

I would always rather owe than get a refund. Refunds are giving the government an interest free loan and it irks me on every level. Owing $74 is pretty close to breaking even. It's hard to break completely even it seems. We don't have state income tax, so that's cool and we don't have to worry about owing two parties.

Truth! That's what our CPA says too. We like to have a small buffer in there so we don't owe as much as normal but that's about it.

jtmh2012 · January 2016

I guess i'm the oddball, I'd rather the government owe me than me owe the government, but I do try to minimize the amount of the refund.

Erikan73 · January 2016

Fellow DINK, I claim single & zero & husband claims married & 1 if I remember correctly. We've been playing with his to figure out what the magic formula is. He also has an extra $20 per pay withheld for Federal Taxes. We file separate because with how Ohio State tax is, we end up getting more money back in total if we file separate then together. So I file my taxes and usually end up with a refund between state & federal of about $1500.00. But then I have to turn around & usually put about $1100 towards hubby's federal taxes. Hubby hates that he keeps owing but I told him as long as my refund covers what he owes, we're good.

AprilZ81 · January 2016

Erikan73 said:

Fellow DINK, I claim single & zero & husband claims married & 1 if I remember correctly. We've been playing with his to figure out what the magic formula is. He also has an extra $20 per pay withheld for Federal Taxes. We file separate because with how Ohio State tax is, we end up getting more money back in total if we file separate then together. So I file my taxes and usually end up with a refund between state & federal of about $1500.00. But then I have to turn around & usually put about $1100 towards hubby's federal taxes. Hubby hates that he keeps owing but I told him as long as my refund covers what he owes, we're good.

Hello fellow Buckeye! I didn't realize you lived in Ohio too!

Last year we filed Ohio taxes separately but I think we filed our federal taxes jointly. Our accountant runs the various methods to see which one is best for us overall. We paid an extra fee for the second set of filing papers, but that fee was more than covered by the tax savings.

brij2006 · January 2016

smerka said:

Illinois is claiming that they are holding refunds for identity theft reasons and has nothing to do with the budget clusterf*ck. There are other states doing it too but I am not sure I believe anything that comes out of Springfield. The nice thing is that IL has a flat tax so there usually isn't a huge swing one way or the other.

Yeah, they're saying it's for "identity theft" reasons. Our district representative was in our town last night and I flat out asked him if that was truly the reason why. He said no, the money isn't there until other funds come in and since the IL budget is at an impasse, all distributions of money are on hold. So they can't use their normal budgeted money for refunds.

Gotta love it.

short+sassy · January 2016

brij2006 said:

smerka said:

Illinois is claiming that they are holding refunds for identity theft reasons and has nothing to do with the budget clusterf*ck. There are other states doing it too but I am not sure I believe anything that comes out of Springfield. The nice thing is that IL has a flat tax so there usually isn't a huge swing one way or the other.

Yeah, they're saying it's for "identity theft" reasons. Our district representative was in our town last night and I flat out asked him if that was truly the reason why. He said no, the money isn't there until other funds come in and since the IL budget is at an impasse, all distributions of money are on hold. So they can't use their normal budgeted money for refunds.

Gotta love it.

I don't even live in IL and I find that infuriating. So, it's okay to lie to all your citizens with some cockamamie story instead of just 'fessing up they can't balance their budget.

In one of my first jobs out of college, I was an office manager for a tree care company. We had the city contracts for two districts in NOLA. Every year...like clockwork...our invoices suddenly stopped getting paid sometime in the 4th quarter. I'd call multiple times a week. I'd ask for explanations. I'd ask for the dates the checks would be cut. Always the same answers. Either "I don't know" or "those invoices are still being processed". Then Jan. 1st...and the new budget year hit...and the checks magically start rolling in one after another.

brij2006 · January 2016

short+sassy said:

brij2006 said:

smerka said:

Illinois is claiming that they are holding refunds for identity theft reasons and has nothing to do with the budget clusterf*ck. There are other states doing it too but I am not sure I believe anything that comes out of Springfield. The nice thing is that IL has a flat tax so there usually isn't a huge swing one way or the other.

Yeah, they're saying it's for "identity theft" reasons. Our district representative was in our town last night and I flat out asked him if that was truly the reason why. He said no, the money isn't there until other funds come in and since the IL budget is at an impasse, all distributions of money are on hold. So they can't use their normal budgeted money for refunds.

Gotta love it.

I don't even live in IL and I find that infuriating. So, it's okay to lie to all your citizens with some cockamamie story instead of just 'fessing up they can't balance their budget.
In one of my first jobs out of college, I was an office manager for a tree care company. We had the city contracts for two districts in NOLA. Every year...like clockwork...our invoices suddenly stopped getting paid sometime in the 4th quarter. I'd call multiple times a week. I'd ask for explanations. I'd ask for the dates the checks would be cut. Always the same answers. Either "I don't know" or "those invoices are still being processed". Then Jan. 1st...and the new budget year hit...and the checks magically start rolling in one after another.

Lol. Just the 4th quarter not being paid. I believe we're into 15 months of state funded items not getting paid. Illinois owes state programs something like $30million in back payments. This includes mental health facilities, day cares, nursing homes, municipalities, etc.

Illinois is seriously in a mess right now. All because they can't agree on a freaking budget.

We looked into a large day care for DD just last week. They are not accepting new kids because they're having to lay off workers in order to keep themselves self-funded until the state pays out for all of the kids that are there through the state assistance program. Even though we would not be using that program and would be paying cash for her care.

It's sad. So many places have cut programs, cut hours, and laid people off because of this.

short+sassy · January 2016

brij2006 said:

short+sassy said:

brij2006 said:

smerka said:

Illinois is claiming that they are holding refunds for identity theft reasons and has nothing to do with the budget clusterf*ck. There are other states doing it too but I am not sure I believe anything that comes out of Springfield. The nice thing is that IL has a flat tax so there usually isn't a huge swing one way or the other.

Yeah, they're saying it's for "identity theft" reasons. Our district representative was in our town last night and I flat out asked him if that was truly the reason why. He said no, the money isn't there until other funds come in and since the IL budget is at an impasse, all distributions of money are on hold. So they can't use their normal budgeted money for refunds.

Gotta love it.

I don't even live in IL and I find that infuriating. So, it's okay to lie to all your citizens with some cockamamie story instead of just 'fessing up they can't balance their budget.
In one of my first jobs out of college, I was an office manager for a tree care company. We had the city contracts for two districts in NOLA. Every year...like clockwork...our invoices suddenly stopped getting paid sometime in the 4th quarter. I'd call multiple times a week. I'd ask for explanations. I'd ask for the dates the checks would be cut. Always the same answers. Either "I don't know" or "those invoices are still being processed". Then Jan. 1st...and the new budget year hit...and the checks magically start rolling in one after another.

Lol. Just the 4th quarter not being paid. I believe we're into 15 months of state funded items not getting paid. Illinois owes state programs something like $30million in back payments. This includes mental health facilities, day cares, nursing homes, municipalities, etc.
Illinois is seriously in a mess right now. All because they can't agree on a freaking budget.
We looked into a large day care for DD just last week. They are not accepting new kids because they're having to lay off workers in order to keep themselves self-funded until the state pays out for all of the kids that are there through the state assistance program. Even though we would not be using that program and would be paying cash for her care.
It's sad. So many places have cut programs, cut hours, and laid people off because of this.

That is really sad! It's like its just okay to not pay your bills if you are a government entity. And, of course, when it gets to the extent of laying people off that just exacerbates the problem. Less income=less state tax being collected.

Trading war stories. Here in Louisiana, the governor who just left (Jindal, also former GOP candidate), left our budget in utter shambles. He came in with a budget surplus and turned that into a bigger and bigger deficit every year.

So now the new governor is trying to figure out "how to keep the lights on". It's looking like they are going to "temporarily" raise the state sales tax by 1.5% because that is the quickest fix. There are other plans also, but they would take a few months up to a couple years for the effects to be seen.

If the sales tax goes up 1.5%, it will put NOLA at a 10.5% sales tax (5.5% state, 5% Orleans Parish). And she will take her crown for "highest sales tax of any city in the United States". And just for the cherry on top, there are no exemptions for sales tax. Not milk. Not bread. Not even prescription medication. But that's true now, it's not new.

brij2006 · January 2016

Oooh ouch. 10.5% sales tax is insane. And I thought crook county (sorry, Cook county) in Illinois where Chicago is, was bad. They're at 10.25%. It was such a shock when I moved there. Spend $100 at the grocery store, budget another $10 just for the stupid taxes. Yet they're now trying to make the Chicago school district a "state" problem. Their reasoning is that then they can file bankruptcy and no longer have to pay out the pensions that they guaranteed all of the employees all of these years. Where has all of that sales tax gone?

It's seriously such a mess. I try not to follow the train wreck, but H is a village commissioner and will be running for mayor in 2 years. So he occasionally has meetings or dinners to rub elbows with people in Springfield. So I try to at least have some common knowledge about the current issues.

Tax Witholding

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