help adjusting NY state tax withholding

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help adjusting NY state tax withholding

Postby icedtea » Wed May 22, 2013 2:16 pm

I paid $560 in NY state tax last year. I was told by some people on this forum to complete form IT-2104 to elect additional withholding from my paychecks in order avoid owing too much next year. This seems easier than paying estimated tax payments at this time. The form is available here: http://www.tax.ny.gov/pdf/current_forms ... ill_in.pdf

I was going to put 22 in line 3. The amount is per weekly pay period. I get paid every two weeks, so this would mean 44 a check. I have 13 checks left this year, so this would amount to $572. That should cover it.

Am I supposed to indicate something on lines 4 or 5? How do I figure that out? I pay city tax. I'm not a resident of Yonkers.

I posted this the other day but my thread got deleted for some reason. Trying again...

Thanks,
Iced Tea
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Re: help adjusting NY state tax withholding

Postby scrabbler1 » Wed May 22, 2013 5:05 pm

I remember replying to this thread before the website meltdown a few days ago.

I recall suggesting you check the NYS Estimated Tax instructions to see what the "safe harbor" rules are and how you make sure you are in a safe harbor. You may be able to avoid changing your withholding if you can get into a safe harbor throughestimated tax payments, something you will have much more control over.
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Re: help adjusting NY state tax withholding

Postby icedtea » Wed May 22, 2013 5:59 pm

scrabbler1 wrote:I remember replying to this thread before the website meltdown a few days ago.

I recall suggesting you check the NYS Estimated Tax instructions to see what the "safe harbor" rules are and how you make sure you are in a safe harbor. You may be able to avoid changing your withholding if you can get into a safe harbor throughestimated tax payments, something you will have much more control over.


I'll take a look. Maybe I'm missing something but what's the issue with electing for additional withholding? Why is estimated tax payments preferred?
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Re: help adjusting NY state tax withholding

Postby scrabbler1 » Wed May 22, 2013 6:21 pm

Both withholding and estimated taxes are methods to boost how much taxes are paid prior to April 15th. Whether one or the other is preferred is debatable. I have used estimated taxes since the late 1990s when I had a lot of investment income which had zero taxes withheld (and I was already at zero exemptions but did not ask to have extra taxes withheld as you are contemplating).

I do not work any more (I am an early retiree) so the only way I can prepay taxes and get into a safe harbor is to make estimated tax payments.

You might want to ask someone in your payroll department how the data you enter on the withholding form gets applied to your paycheck.
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Re: help adjusting NY state tax withholding

Postby damjam » Wed May 22, 2013 6:30 pm

You can put the total amount of additional withholding in either line 3 or 4 (NYC). When you file your NY & NYC taxes it's all together on one form. All of your payments are totaled up and all of your tax liabilities for NY & NYC are totaled and a single amount owed is computed. So as long as you have paid enough to cover the total of both amounts it doesn't matter if you designated the payment as NY State or NYC or split between the two.

I think that doing it as additional withholding rather than estimated payments is better. AFAIK, if you do the additional payments as estimated payments there is the possibility that your timing could be off. When you make estimated payments they are supposed to match the timing of your income. If you get a bonus in April the estimated payment that covers April should be larger. When you pay by withholding you don't have to meet the timing requirement. Someone correct me if this is wrong.
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Re: help adjusting NY state tax withholding

Postby icedtea » Thu May 23, 2013 12:14 am

damjam wrote:You can put the total amount of additional withholding in either line 3 or 4 (NYC). When you file your NY & NYC taxes it's all together on one form. All of your payments are totaled up and all of your tax liabilities for NY & NYC are totaled and a single amount owed is computed. So as long as you have paid enough to cover the total of both amounts it doesn't matter if you designated the payment as NY State or NYC or split between the two.

I think that doing it as additional withholding rather than estimated payments is better. AFAIK, if you do the additional payments as estimated payments there is the possibility that your timing could be off. When you make estimated payments they are supposed to match the timing of your income. If you get a bonus in April the estimated payment that covers April should be larger. When you pay by withholding you don't have to meet the timing requirement. Someone correct me if this is wrong.


Thanks for the reply. This is what appears on my 2012 NY state tax form:

Total NY State tax withheld: $3506
Total NY City tax withheld: $2151
Total Yonkers tax withheld: blank
Total Payments: $5720
Amount you owe: $566

If I'm interpreting your email correctly, this means that, assuming my tax liability to the state/city is similar in 2013, as long as I have a total of about $570 withheld from my paychecks, I'll be in the clear. Ie. I don't need to worry about the specific amount of tax withheld for the state or city, just the total amount I owed. Can you confirm?

I'll call my employer's Finance dept to confirm that the # I list in the form on line 3 corresponds to a weekly deduction. That's what it says at the bottom of the form so I think this is clear but worth double-checking I have it right.
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Re: help adjusting NY state tax withholding

Postby damjam » Thu May 23, 2013 12:31 am

icedtea wrote:If I'm interpreting your email correctly, this means that, assuming my tax liability to the state/city is similar in 2013, as long as I have a total of about $570 withheld from my paychecks, I'll be in the clear. Ie. I don't need to worry about the specific amount of tax withheld for the state or city, just the total amount I owed. Can you confirm?

Bold added for emphasis.
Yes, that is what I meant.
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Re: help adjusting NY state tax withholding

Postby Epsilon Delta » Thu May 23, 2013 12:52 am

To confirm what damjam said you can look at NY state form IT-2105.9, where underpayment penalties are calculated. Line 14 is where withholding is entered and if you follow the reference to IT-201 you'll see that only the total of NY State, NY City and Yonkers City tax matter.

14 Income taxes withheld (from Form IT-201, lines 72, 73, and 74; Form IT-203, lines 62, 63, and 64; or Form IT-205, lines 34, 35, and 36)
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