I've examined our (my wife and I are both employed full time) current tax withholdings for 2021 and estimate we'll have withheld a few thousand dollars more than we owe. This is partially due to the expanded higher tax credit (from $2k/child to $3600/child) that wasn't amended on our W-4 and partially from our ability to itemize charitable contributions.
I'd like to avoid the big refund next spring. Is it worth amending our W-4s (or one of our W-4) to withhold less in taxes for the remainder of 2021? If so, which section should we amend to account for this?
Adjusting Federal Tax Withholdings to Avoid Refund
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Re: Adjusting Federal Tax Withholdings to Avoid Refund
You need a large enough number on W4 line 4b to reduce your expected tax to 0 for the remainder of the year. Don't forget to switch it back to "normal" in January.
Re: Adjusting Federal Tax Withholdings to Avoid Refund
Have you been receiving the monthly payments of the Child tax credit? That will result in half of the value of the credit being paid to you this year and reconciled on your return next spring
Mike
Mike
Re: Adjusting Federal Tax Withholdings to Avoid Refund
I'd also be sure that you within the safe harbor amount before reducing withholding.
People say nothing is impossible. I do nothing all day.
Re: Adjusting Federal Tax Withholdings to Avoid Refund
You could use all or part of your tax refund to purchase I bonds if you wanted.
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Re: Adjusting Federal Tax Withholdings to Avoid Refund
Thanks. If I include itemizations (above the standard deductions) in line 4b, will it prorate that reduced withholding for the remainder of 2021? Or does it reduce the withholding as if it were applied over the entire year (e.g., 26 pay periods if paid semi-monthly)?Mike Scott wrote: ↑Tue Oct 26, 2021 2:24 pm You need a large enough number on W4 line 4b to reduce your expected tax to 0 for the remainder of the year. Don't forget to switch it back to "normal" in January.