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assistance with W4 dependents and deductions. please

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nabril15

Member
Hello, I'm new to the forum.

After doing last year's taxes, we will owe about $8k, and that is a first for us. After researching, it looks like a wrong W4 setting is to be blamed perhaps, so I ask for some guidance.
I have 2 jobs - $90k and $12k, and my wife works - $80k or so. We have 2 kids, one of which is in college, and the other is 11.

I filled out the W4 worksheet, and I had a question about the part where the income gets entered for the lowest paying job. Do I use my second job or my wife's?
Once I get that answer, I will return to the worksheet to complete it.
Let's say that the worksheet outcome is that I need to claim X dependents with Y additional withholding (perhaps). Do I apply those X and Y to my higher-paying job's W4 and set 0 dependents for the other 2 W4's (my second job and my wife's)? This is what I've read as a course of action in other forums and articles.

Thank you
 


LdiJ

Senior Member
Hello, I'm new to the forum.

After doing last year's taxes, we will owe about $8k, and that is a first for us. After researching, it looks like a wrong W4 setting is to be blamed perhaps, so I ask for some guidance.
I have 2 jobs - $90k and $12k, and my wife works - $80k or so. We have 2 kids, one of which is in college, and the other is 11.

I filled out the W4 worksheet, and I had a question about the part where the income gets entered for the lowest paying job. Do I use my second job or my wife's?
Once I get that answer, I will return to the worksheet to complete it.
Let's say that the worksheet outcome is that I need to claim X dependents with Y additional withholding (perhaps). Do I apply those X and Y to my higher-paying job's W4 and set 0 dependents for the other 2 W4's (my second job and my wife's)? This is what I've read as a course of action in other forums and articles.

Thank you
I find that the worksheet that is attached to the W4 does not produce results that avoid a taxpayer owing tax.

Part of your problem is your second job. It taxes your income as if that was your only income, when you are in a higher tax bracket with your regular job and your wife's job, and therefore you need more coming out. However, that cannot be your only problem when you owe that much. Your allowances are going to be off as well. Every tax professional has a different rule of thumb for allowances, but my advice is generally no more allowances than there are people in your family if you are happy breaking even, and no more than the number of people in your family minus 1, if you prefer to have a small refund rather than risk owing a small amount.

If you are ending up owing 8k, then that means that you needed $667.00 more coming out of your combined pays each month to break even. Where you end up deriving that from, is really up to you and your wife.
 

nabril15

Member
I find that the worksheet that is attached to the W4 does not produce results that avoid a taxpayer owing tax.

Part of your problem is your second job. It taxes your income as if that was your only income, when you are in a higher tax bracket with your regular job and your wife's job, and therefore you need more coming out. However, that cannot be your only problem when you owe that much. Your allowances are going to be off as well. Every tax professional has a different rule of thumb for allowances, but my advice is generally no more allowances than there are people in your family if you are happy breaking even, and no more than the number of people in your family minus 1, if you prefer to have a small refund rather than risk owing a small amount.

If you are ending up owing 8k, then that means that you needed $667.00 more coming out of your combined pays each month to break even. Where you end up deriving that from, is really up to you and your wife.
thanks Ldij
So, if I Were to follow your rule of our 4 allowances, I should have those 4 on the w4 of my main job, and the others (2nd job and wife) should be zero? Or should her and I split it into 2 and 2?
 

LdiJ

Senior Member
thanks Ldij
So, if I Were to follow your rule of our 4 allowances, I should have those 4 on the w4 of my main job, and the others (2nd job and wife) should be zero? Or should her and I split it into 2 and 2?
You and your wife could both have 4 allowances. You should have zero allowances on your second job, and maybe even take out extra federal withholding as well.
 

nabril15

Member
You and your wife could both have 4 allowances. You should have zero allowances on your second job, and maybe even take out extra federal withholding as well.
Four deductions for each of us? Won't they take out waaaayy too little?
 

LdiJ

Senior Member
Four deductions for each of us? Won't they take out waaaayy too little?
No, because the two of you make similar incomes. If her income was much smaller than yours, then yes, it could be a problem. However, her income is not very different than yours. (on your main job)
 

Stephen1

Member
I'm thinking that you're overthinking this. Instead of trying to manipulate the worksheet to come up with the perfect answer, try leaving the number of your deductions the same but have your employer hold out an additional amount. Look at LdiJ's example - take how much more you and your wife were short, divide it by the number of paychecks, have your employer(s) withhold that much extra.
 

nabril15

Member
No, because the two of you make similar incomes. If her income was much smaller than yours, then yes, it could be a problem. However, her income is not very different than yours. (on your main job)
Ldij---i like stephen's suggestion, but I ask you this in the name of getting educated. My understanding is that the more dependents that we list on a w4 = less taxes taken out (more kids should = more money available to be used). Or am I wrong? That's why your statement of us both having 4 dependents sounds strange to me, based on my assumption.
 

LdiJ

Senior Member
Ldij---i like stephen's suggestion, but I ask you this in the name of getting educated. My understanding is that the more dependents that we list on a w4 = less taxes taken out (more kids should = more money available to be used). Or am I wrong? That's why your statement of us both having 4 dependents sounds strange to me, based on my assumption.
The word allowances is used these days since there are no longer any dependency exemptions. However, yes, the more allowance you list the less tax they take out. However, you wife's W2 is completely independent from yours and is calculated completely independently from yours. Plus, you claiming 4 and your wife claiming zero would put the majority of the tax burden on her. If you were correct, then you should each be claiming two. However you are not correct.

You are too caught up in the minutia of the whole issue. I think that following stephen's advice would be easier for you to handle. I really wish that those worksheets did not exist. I think that they cause more confusion than not.
 

nabril15

Member
The word allowances is used these days since there are no longer any dependency exemptions. However, yes, the more allowance you list the less tax they take out. However, you wife's W2 is completely independent from yours and is calculated completely independently from yours. Plus, you claiming 4 and your wife claiming zero would put the majority of the tax burden on her. If you were correct, then you should each be claiming two. However you are not correct.

You are too caught up in the minutia of the whole issue. I think that following stephen's advice would be easier for you to handle. I really wish that those worksheets did not exist. I think that they cause more confusion than not.
Thank you and I understand.
Up until 2017, I've either gotten a refund or owed very very very little. Something happened last year that has me owing $8k. I spoke to a tax accountant-friend and his findings are:
1. I had an investment account with bank X that was bought by Etrade; therefore, all of those investments were liquidated by that transaction and thus I realized some gains (about $1500).
2. The standard deduction change to $24k. I'm not sure on that one since with all of my itemized deductions this year, I fell below $24k, so taking the standard deduction of $24k doesn't appear to harm us.
3. Somehow our w4 information got messed up. My company had me as single for part of the year somehow, and with 3 deductions. Then I changed it to 2. I don't remember what my wife had.

So, I obviously don't want a repeat of last year, but points 1 and 3 shouldn't happen again. I think that I will change my w4's to match last year's, and then contribute an additional $8k/12 by the 2 of us somehow.
 
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