Very worried about my 2020 W-4, Withholding - Please Help

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Topic Author
Doc7
Posts: 237
Joined: Fri Aug 24, 2007 12:55 pm

Very worried about my 2020 W-4, Withholding - Please Help

Post by Doc7 » Fri Feb 28, 2020 12:20 pm

All, I am experiencing a great deal of stress about this and hope someone can set me straight.

A big "Problem" I have is that I just took a job with no overtime as a promotion. This will be a loss of income for the next year at least until another promotion. In 2019 I had ZERO paychecks that had less than $2,000 of overtime. This means I have no idea what modifying my W-4 may do to my "base" income that we use on our budget sheet (an excel sheet divides up overtime appropriately 17% of gross to retirement, and the rest of the gross or net overtime/bonuses as applicable divvied up accordingly). I submitted a new W-4 and am almost panicking at the thought that even if the changes are made, because i don't know what my month to month withholding "WAS" without overtime, I will have no idea if the changes will appropriately knock a $3,600 tax refund for 2019 to $0 owed/refunded in 2020 which is my goal.

My last non overtime paycheck was in November of 2018, but I am virtually certain that changes in taxes since 2018 means that I can't just compare my March 2020 paycheck to my November 2018 and make sure that Federal withholding is approximately $300 less, which is the only way I know to know if the new witholding would be approximately correct. As you are likely aware, in the past with a big refund like this, i simply would log on and change my "Exemptions" or "Allowances" from "1" to "2" (which, btw, we are expecting our third in September). In 2020 I can't do that with the new W-4.

I did the online IRS Calculator here: https://apps.irs.gov/app/tax-withholdin ... or/results

It told me to print and sign a W-4 for myself that the only prefill number was "$259" in Row 3, and my wife's had "$77" in Row 3. My Payroll and Tax Services department at my employer (company of > 20,000 employees) told me this was unbelievable and there was simply no way it was correct.. However they did submit it...

I went to an online calculator called "Paycheck City" and put in my numbers as to how changing items would change my withholding, and everything i see shows my paycheck DECREASING 500-1000 per month instead of INCREASING $300 per month.

Here is what I entered into the IRS Calculator. As you can tell, on this round is spit out $317 instead of $259 (thats because i added state income tax amount). Can someone who's a pro at this run the numbers through the link above and help me find out what I am doing wrong, and if changing from what used to be "Federal 01" to "Line 3 = $259" will make my refund go from $3,600 to $0, thus probably helping my paycheck approx $300 / month?
MFJ

Not a dependent for someone else

Yes i will claim 3 dependents this year

Yes have checks with withholding

1 job each

No pension

Yes unearned income (call it $300 in savings account interest from my 2019 taxes)

no to all demographics

My Job :Yes, Monthly, most recent pay period ended Jan 31, $135K this year, $16111 bonuses expected later this year (actually my Feb check), Yes eMployer will withhold taxes

Last check federal income taxes withheld $1339** does not include FICA/MED per Help Tip **

Yes to 401K, $17916

Yes to FSA, $5K



Spouse Job:

Twice monthly

Most recent Feb1 5

$69,950 no bonus

$540 withheld year to date, $179 held last check

Yes to 401K, $6500

no to HSA/FSA

$350 Unearned Income

See Adjustments

$7000 in HSA Accounts that are not Payroll Deductions

Itemize

State taxes approx $7000

Charity $18,000

Other Deductions $7500 (Mortgage interest)

See tax credits

3 children under 17

$3000 in child care expenses (its way more but turbotax limited me so i didnt put all that) No earned income tax credit

No other credits

Expected tax withholding$23,911*

Anticipated tax obligation$18,529**

Estimated over payment$5,382



DRAG REFUND SLIDER TO $0

Your Job, Annual Pre-tax Wages: $135,000
To get your desired refund amount, you will need $1,167 withheld from each paycheck, $172 less than your current tax withholding.

How to Adjust Your Withholding
Step 1: Complete a new Form W-4 online or via paper as follows:

Check your personal information is correct (line 1(a) and (b) on Form W-4)

Select Married filing jointly (or Qualifying widow(er)) filing status (line 1(c) on Form W-4)

Enter $317 for credits and other reductions to annual withholding (Line 3 on Form W-4 is already pre-filled in the Download button below)

If using a paper form sign and date it

Step 2: Submit this new information to your employer as soon as possible





Fairly close to the $259 I had last time i did it.

Your Spouse's Job, Annual Pre-tax Wages: $69,950
To get your desired refund amount, you will need $173 withheld from each paycheck, $6 less than your current tax withholding.

How to Adjust Your Withholding
Step 1: Complete a new Form W-4 online or via paper as follows:

Check your personal information is correct (line 1(a) and (b) on Form W-4)

Select Married filing jointly (or Qualifying widow(er)) filing status (line 1(c) on Form W-4)

Enter $94 for credits and other reductions to annual withholding (Line 3 on Form W-4 is already pre-filled in the Download button below)

If using a paper form sign and date it

Step 2: Submit this new information to your employer as soon as possible


Here is what I put into Paycheck City to compare the 2019 W-4 methods and the 2020:
https://www.paycheckcity.com/calculator/salary/virginia
Looking at Jan 2020 pre overtime values, to spit out what it predicted my check would be as a simulated basline:
Virginia
9765 Pay per period, monthly
Don't check Use 2020 W-4
Married, 1 Federal Allowance
$1935 voluntary deductions (FSA plus 401k(
Results:
Paycheck Results
Gross Pay $9,765.00
Federal Withholding $1,149.63
Social Security $605.43
Medicare $141.59
State $518.47
hsa and 401 $1,935.00
Net Pay $5,414.88
Now click edit then "Use 2020 W-4"
Check 2 Jobs in step 2 and write $259 in Step 3. This is exactly per the IRS calculator form. HSA/401K deduction stays 1935.
RESULTS. Hint : The Federal goes 400 dollars the WRONG way.
Gross Pay $9,765.00
Federal Withholding $1,580.64
Social Security $605.43
Medicare $141.59
State $518.47
hsa and 401 $1,935.00
Net Pay $4,983.87

mlipps
Posts: 1005
Joined: Thu Jun 21, 2012 9:35 am

Re: Very worried about my 2020 W-4, Withholding - Please Help

Post by mlipps » Fri Feb 28, 2020 1:05 pm

My first guess is you're missing health insurance premiums somewhere. Also, you can't enter your FSA & 401k into the paycheck calculator in the same line. The FSA deduction is exempt from FICA and Federal taxes (and probably state--not sure about VA). 401k is only exempt from Federal & state.

Next, it appears that checking the "two jobs" box on the W4 makes a big difference in the with holding. I'm not super familiar with the new W-4 yet, but I don't see it explicitly in your IRS calculator results that you should check that box so I'm thinking they did not intend for you to do so.

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CAsage
Posts: 1753
Joined: Sun Mar 27, 2016 6:25 pm

Re: Very worried about my 2020 W-4, Withholding - Please Help

Post by CAsage » Fri Feb 28, 2020 1:32 pm

I am not familiar with the new W-4 form, but would suggest an alternate "top down" approach rather than tormenting yourself bottom-up. Assuming you do your own taxes or can use a 2020 tax mode, accurately project your total tax due for this year then simply calculate:

Total_Tax_2020 minus Tax_paid_last_paycheck = remaining tax to be paid through withholding this year.

Divide that number by the withholding in your most recent paycheck, and then jigger the numbers up or down until the future payments times future pay periods (with your prior payments) equals Total_Tax_2020. Repeat the calculation with the next pay period. Is there an option to just add a specific dollar value?
Salvia Clevelandii "Winifred Gilman" my favorite. YMMV; not a professional advisor.

DIFAR31
Posts: 413
Joined: Mon Jan 01, 2018 5:51 pm

Re: Very worried about my 2020 W-4, Withholding - Please Help

Post by DIFAR31 » Fri Feb 28, 2020 1:54 pm

CAsage wrote:
Fri Feb 28, 2020 1:32 pm
Is there an option to just add a specific dollar value?
As with previous versions of the federal W-4, there is an option to request a specific dollar amount for "extra withholding" each pay period, but this will be used with other entries that make the whole form a real mess. I prefer the process that you describe of estimating your tax obligation for the year, subtracting the amount already withheld/paid, and then dividing the difference by the number of pay periods remaining (I understand that for those with an income that varies pay period to pay period this may be problematic). Unfortunately, the W-4 does not provide an easy option to simply request that a specific amount be withheld each pay period.

So, here's what I have done: step 3 of the new W-4 allows the taxpayer to enter the estimated amount of tax credits for the year. I reported a number on line 3 that was unrealistic but that exceeded the estimated total tax obligation. This by itself should bring the pay period withholding to $0. I then entered on line 4c the "extra withholding" that I wanted each pay period to specify the exact amount to withhold with every paycheck, to arrive at a number over the rest of the year that will satisfy the total tax obligation without running up a large amount to claim as a refund.

Topic Author
Doc7
Posts: 237
Joined: Fri Aug 24, 2007 12:55 pm

Re: Very worried about my 2020 W-4, Withholding - Please Help

Post by Doc7 » Fri Feb 28, 2020 2:41 pm

mlipps wrote:
Fri Feb 28, 2020 1:05 pm
My first guess is you're missing health insurance premiums somewhere. Also, you can't enter your FSA & 401k into the paycheck calculator in the same line. The FSA deduction is exempt from FICA and Federal taxes (and probably state--not sure about VA). 401k is only exempt from Federal & state.

Next, it appears that checking the "two jobs" box on the W4 makes a big difference in the with holding. I'm not super familiar with the new W-4 yet, but I don't see it explicitly in your IRS calculator results that you should check that box so I'm thinking they did not intend for you to do so.
There is no 2 Jobs box on the W-4.

Our health insurance premiums are $0, can you please explain what you mean by that? If you are saying that messed up the results for the PayCheckCity paycheck estimator having it the same on both would have still allowed me to see if my check would go up or down, right ? that was the goal, compare to baseline, not necessarily see exactly what $ my paycheck will be. I'll see that in a few weeks...

Topic Author
Doc7
Posts: 237
Joined: Fri Aug 24, 2007 12:55 pm

Re: Very worried about my 2020 W-4, Withholding - Please Help

Post by Doc7 » Fri Feb 28, 2020 2:46 pm

mlipps wrote:
Fri Feb 28, 2020 1:05 pm
My first guess is you're missing health insurance premiums somewhere. Also, you can't enter your FSA & 401k into the paycheck calculator in the same line. The FSA deduction is exempt from FICA and Federal taxes (and probably state--not sure about VA). 401k is only exempt from Federal & state.

Next, it appears that checking the "two jobs" box on the W4 makes a big difference in the with holding. I'm not super familiar with the new W-4 yet, but I don't see it explicitly in your IRS calculator results that you should check that box so I'm thinking they did not intend for you to do so.
Thanks! The PayCheckCity Calculator shows a $100 INCREASE when I uncheck the "Two Jobs" box, which is NOT checked on my new W-4 form either. This is encouraging! That is a $600 swing!

Sahara
Posts: 122
Joined: Tue Dec 04, 2018 6:21 pm

Re: Very worried about my 2020 W-4, Withholding - Please Help

Post by Sahara » Fri Feb 28, 2020 2:55 pm

The spreadsheet here may be used to estimate what the employer will withhold:

https://www.irs.gov/businesses/small-bu ... -employers

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Stinky
Posts: 4394
Joined: Mon Jun 12, 2017 11:38 am
Location: Sweet Home Alabama

Re: Very worried about my 2020 W-4, Withholding - Please Help

Post by Stinky » Fri Feb 28, 2020 3:02 pm

CAsage wrote:
Fri Feb 28, 2020 1:32 pm
I am not familiar with the new W-4 form, but would suggest an alternate "top down" approach rather than tormenting yourself bottom-up. Assuming you do your own taxes or can use a 2020 tax mode, accurately project your total tax due for this year then simply calculate:

Total_Tax_2020 minus Tax_paid_last_paycheck = remaining tax to be paid through withholding this year.

Divide that number by the withholding in your most recent paycheck, and then jigger the numbers up or down until the future payments times future pay periods (with your prior payments) equals Total_Tax_2020. Repeat the calculation with the next pay period. Is there an option to just add a specific dollar value?
This is really good advice.

You’ll be very close if you use the method described above with your tax software for 2019 tax year.
It's a GREAT day to be alive - Travis Tritt

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