"Ash78, voting early and often" (ash78)
02/09/2018 at 09:38 • Filed to: Taxes, PSA
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"Ash78, voting early and often" (ash78)
02/09/2018 at 09:38 • Filed to: Taxes, PSA | 3
| 25 |
As of this morning’s paycheck, my ginormous employer has started giving us the “benefit” of lower tax withholdings on our paychecks.
You would think this is a good thing, right? Isn’t this the boost to our bottom line that will keep our economy running bigly along as the best economy the world has ever seen, even including those freaky-deaky Romans who thrived on bloodsports, lived for hedonism, and made everything possible through quasi-legal immigrant labor? Of course it is! No comparison!
Just a heads up: If you’re seeing a big, recent benefit from your withholdings, take a close look at the bigger picture of your tax situation. I will actually be paying about the same in taxes under the new plan vs the old. However, many employers are using guidance from payroll companies to change the withholding tables so people start seeing more benefit immediately. If you’re in my situation, this will result in a large and often unexpected tax bill come next spring. Like, in the thousands.
Yes, I know next spring in terms of politicians (and many consumers) is like a decade away, but it’s best to start planning now.
PSA: Go get your employer’s W-4 form and consider changing your withholdings. You don’t even have to do the little worksheet, you just have to fill out “S” or “M” (marital status) and put a number between 0 and 10 for deductions. It doesn’t have to be the truth, it’s just a guideline – there is no legal penalty here for what you write, only for if you don’t have enough withheld. Interestingly, the IRS doesn’t owe you a penalty for over-withholding. Funny how that works!
(Disclosure: I’ve been withholding as M-10 for several years, since our deductions have always been itemized and I will continue to do so. There is no reason at all for my net pay to have gone up, so their algorithm is way off.)
/rant off
functionoverfashion
> Ash78, voting early and often
02/09/2018 at 09:46 |
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My bi-weekly paycheck only went up $25.00 so I think I’ll be ok. But I had an employer change my withholdings once and we had to pay around $5k in taxes. It was enough that they required us to make estimate payments for the next year, even though we fixed the issue. So we paid something like $1200 quarterly, and then of course got it all BACK again the next year in the form of a giant refund. Whee!
SnapUndersteer, Italian Spiderman
> Ash78, voting early and often
02/09/2018 at 09:48 |
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The higher the witholding, the higher taxes you pay (as you go during the year).
Are you trying to target as close to $0 tax refund? I know that’s the smart thing to do, and depending on how well you expect to do in the stock market or various other investments, it’s even smarter (and riskier) to have to owe Uncle Sam come April 15th
BeaterGT
> Ash78, voting early and often
02/09/2018 at 09:50 |
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Still waiting for the IRS to release their new calculator.
https://www.irs.gov/individuals/irs-withholding-calculator
facw
> Ash78, voting early and often
02/09/2018 at 09:52 |
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Aaron M - MasoFiST
> Ash78, voting early and often
02/09/2018 at 09:54 |
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I’m going to end up owing money this year, in part due to a job change and in part due to selling some stock and making a profit. I was annoyed as I did my taxes, but when I realized why I had no refund, I realized I couldn’t really complain...
Party-vi
> Ash78, voting early and often
02/09/2018 at 09:55 |
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Jebus you have 10 allowances? Do you usually end up owing each tax season? I’ve got one I think, and I typically get back a few grand. I know I could fix this but I’m not responsible enough to do anything smart with the money throughout the year so I let the gubment hold onto it for me. My pay did go up last week as they’re withholding less, which should cut my tax return about in half.
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Ash78, voting early and often
> SnapUndersteer, Italian Spiderman
02/09/2018 at 09:56 |
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I usually aim for $0 or a slight refund. My cash flows tend to get crunched when I suddenly owe at the end of the year, and if you owe too much they add a penalty on top of it...
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Ash78, voting early and often
> Party-vi
02/09/2018 at 09:58 |
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I usually get a little back, but I aim for zero. We have a mortgage, 2 kids, and lots of charity deductions, so it’s usually more an issue of making sure the employer takes out as little as possible. But with this new change, it went way too far.
boredalways
> Ash78, voting early and often
02/09/2018 at 09:58 |
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Let me get this straight: I’m single, but withhold 4, so legally I can claim married on top of a withholding of 10 or less and it’s totally legal?
adamftw
> Ash78, voting early and often
02/09/2018 at 10:06 |
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My check went up ~$50, my wife $100. Going to our accountant Sunday to do our 2017 taxes and find out how boned I’m gonna be with the SALT limitations next year. THANKS, GUYS.
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Ash78, voting early and often
> boredalways
02/09/2018 at 10:08 |
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Sure! But odds are good that you won’t have enough taken out, and that’s where the penalty comes in. I used to claim Single and 5, I think.
Thomas Donohue
> Ash78, voting early and often
02/09/2018 at 10:11 |
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Normally, you could go to the IRS website and use the calculator to estimate what the best number of deductions that works for you.
https://www.irs.gov/individuals/irs-withholding-calculator
However, the IRS is overwhelmed with the latest changes, so the tool is not yet working for the new plan.
Due to the tax law changes signed into law on December 22, 2017, the IRS withholding calculator is currently unavailable . The IRS will update the calculator as soon as updated withholding information is available.
(Also, holy crap....you claim the max deductions??? Do you owe them tens of thousands each year?)
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SnapUndersteer, Italian Spiderman
> Ash78, voting early and often
02/09/2018 at 10:19 |
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Good call....smart man
Officer Jim Lahey is not a real cop
> Ash78, voting early and often
02/09/2018 at 10:21 |
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This post could be confusing due to terminology—the number between 0 and 10 that you write on the W-4 is EXEMPTIONS, not withholding. You can write in extra amounts to withhold, but otherwise the higher the number you write for exemptions, the lower your withholding will be.
Deductions don’t come in until you do your tax return (but if you’re trying to fine-tune your W-4 to avoid over- or under-withholding, you should of course be considering what deductions and credits you’ll have).
nermal
> Ash78, voting early and often
02/09/2018 at 10:24 |
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I think you’re in the minority - Most people should choose a number of dependents closer to their actual number of dependents. Withholding for 10 dependents if you don’t have 10 is a poor decision - The new plan encourages people to get married and have more children, so the per-dependent deduction should have gone up.
Choosing a closer number to your actual number will be better.
Textured Soy Protein
> Ash78, voting early and often
02/09/2018 at 10:36 |
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The reason for this is the Trump administration was so eager for REAL EVERYDAY WORKING MURRICANS to see an increase in their paychecks that they encouraged employers to update their withholding to reflect the new tax bill, even though the W-4 form hasn’t been updated to reflect the new tax bill. So all the employers are using their employees’ old W-4s to make a best guess recalculation of withholding based on the new rules.
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Ash78, voting early and often
> Officer Jim Lahey is not a real cop
02/09/2018 at 11:01 |
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Good clarification. There is still a big disconnect between the W-4 and reality, though. I wish they’d simply allow people to write a negative number on the “extra amount” line to fine tune their withholdings. That would completely solve it for people who calculate their own taxes — no trickery needed.
His Stigness
> Ash78, voting early and often
02/09/2018 at 11:16 |
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Are you saying payroll companies are changing people’s withholding so they see more in their paycheck each month? I always claim 0 so I don’t have to worry about owing at the end of the year, but I have noticed my check has gotten larger since the first of the year.
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Ash78, voting early and often
> His Stigness
02/09/2018 at 11:20 |
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Correct — they’re given blanket estimates on how much to withhold, which can be grossly inaccurate and result in a giant refund (most likely, but not a good thing) or the opposite, which sucks.
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His Stigness
> Ash78, voting early and often
02/09/2018 at 11:31 |
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So what do you recommend I do then?
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Ash78, voting early and often
> His Stigness
02/09/2018 at 11:35 |
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Nothing — you might see a smaller refund, but you sound safe.
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His Stigness
> Ash78, voting early and often
02/09/2018 at 11:44 |
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Is there anything I can do, or I’m stuck because I already have my withholding at 0?
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Ash78, voting early and often
> His Stigness
02/09/2018 at 11:46 |
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Well, if you want a bigger paycheck and smaller refund, you can take that number up if you’d like. But if you’re already making ends meet and don’t mind a refund (some people love them), then I wouldn’t mess with it.
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Officer Jim Lahey is not a real cop
> Ash78, voting early and often
02/09/2018 at 12:04 |
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Yes, there really should be an “advanced” mode where you can specify a percentage or dollar amount to be withheld.
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His Stigness
> Ash78, voting early and often
02/09/2018 at 12:07 |
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I discussed it with my mom and her and I both just going to keep our withholding at 0 so we get a refund. We both are doing fine with making ends meet.
We’re both rather pissed that she’s getting screwed on her refund because she can’t claim me anymore. I’m still in school, even if it’s graduate school, and she still pays for everything. But just because I’ve reached a magical age she can’t insure me anymore, or claim me. It’s total BS.