Does payroll withholding need to be proportional to income throughout the year?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills.
Post Reply
Topic Author
turtle33
Posts: 14
Joined: Tue Feb 11, 2020 10:43 am

Does payroll withholding need to be proportional to income throughout the year?

Post by turtle33 »

My husband and I (married filing jointly) adjust our payroll withholding so that we cover at least 110% of our total federal tax from the prior year. I manage this so it is approximately equal amounts of federal tax withholding each month.

Other than paychecks income includes interest from HYSAs/CDs and a small royalty payment from a patent. Less than $5000 per year total.

My main question is: if one of us gets a mid-year raise or a bonus, does the IRS care that our withholding is now a smaller percentage of our income? Does it depend on the amount of the raise/bonus?

Second question: we withhold a greater fraction of my husbands taxable income than mine. Could the IRS care about this since we are MFJ?
jebmke
Posts: 26323
Joined: Thu Apr 05, 2007 2:44 pm
Location: Delmarva Peninsula

Re: Does payroll withholding need to be proportional to income throughout the year?

Post by jebmke »

it does not need to be uniform. I typically would wait until bonuses were calculated but not paid and then march down to payroll and tell them how much to withhold to true up my year.
When you discover that you are riding a dead horse, the best strategy is to dismount.
avalpert1
Posts: 570
Joined: Sat Mar 02, 2024 6:15 pm

Re: Does payroll withholding need to be proportional to income throughout the year?

Post by avalpert1 »

Withholdings are treated as if they were withheld evenly throughout the year regardless of when they are actually withheld.
secondcor521
Posts: 1683
Joined: Wed Sep 10, 2014 4:11 pm

Re: Does payroll withholding need to be proportional to income throughout the year?

Post by secondcor521 »

turtle33 wrote: Wed May 15, 2024 8:54 am My husband and I (married filing jointly) adjust our payroll withholding so that we cover at least 110% of our total federal tax from the prior year. I manage this so it is approximately equal amounts of federal tax withholding each month.

Other than paychecks income includes interest from HYSAs/CDs and a small royalty payment from a patent. Less than $5000 per year total.

My main question is: if one of us gets a mid-year raise or a bonus, does the IRS care that our withholding is now a smaller percentage of our income? Does it depend on the amount of the raise/bonus?

Second question: we withhold a greater fraction of my husbands taxable income than mine. Could the IRS care about this since we are MFJ?
If you meet the 110% safe harbor through withholding (or one of the other safe harbors), then the IRS cares exactly zero about the rest of it.

And in fact, even if you don't meet a safe harbor, the IRS doesn't care about the questions you're asking. If you don't meet a safe harbor, then an underpayment penalty may be due. But that underpayment penalty depends on the extent to which your tax payments (collectively) are outstripped by your tax liability (collectively) over the course of the year. Nowhere in the calculations for the underpayment penalty are their inputs for "percentage of income" or "fraction of withholding by spouse ratio". You can confirm this yourself by looking at the IRS instructions around line 38 of Form 1040.
Post Reply