Urgent: How many allowances to claim (married, both spouses working, no kids)

Discussion in 'Tax' started by success_ny@yahoo.com, Jun 24, 2005.

  1. Guest

    I live in New York City. I recently got married and my wife got a new
    job. She has to fill out the W-4, but based on the worksheets on that
    form, she can only claim 0 allowances. She was told in that case, about
    60% of combined taxes will be withheld from her paycheck. I read the
    instructions for W-4 and went through all worksheets. According to
    those, not only she should put 0 as the total number of allowances but
    she should specify about $800 additinally withheld from each paycheck.

    Our situation is simple: no mortgage, no kids, both working, each
    making about 100K/year

    Can anyone help with this?

    Thanks.
     
    , Jun 24, 2005
    #1
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  2. Re: Urgent: How many allowances to claim (married, both spouses working,

    wrote:

    > Our situation is simple: no mortgage, no kids, both working, each
    > making about 100K/year


    Your federal tax liability will probably be about $41,000.
    Your state / local liability will probably be about $21,000.
    Add in Social Security and Medicare for another 14,000. So
    $76,000 in withholdings, which means more like 38%.

    Going by Circular E, "Married but withhold at higher single
    rate, 0 allowances" would give each of you about $22,000 of
    Federal withholding in a year.

    Phoebe :)

    << ======================================================= >>
    << The foregoing is intended for educational purposes only >>
    << and does NOT constitute legal OR professional advice. >>
    << It may not be relied upon for the purpose of avoiding >>
    << penalties that may be imposed on the taxpayer or the >>
    << tax preparer. >>
    << >>
    << The Charter and the Guidelines for submitting >>
    << messages to this newsgroup are at www.asktax.org. >>
    << Copyright (2005) - All rights reserved. >>
    << ======================================================= >>
     
    Phoebe Roberts, EA, Jun 27, 2005
    #2
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  3. Guest

    wrote:

    > I live in New York City. I recently got married and
    > my wife got a new job. She has to fill out the W-4,
    > but based on the worksheets on that form, she can
    > only claim 0 allowances. She was told in that case,
    > about 60% of combined taxes will be withheld from
    > her paycheck.


    I don't understand why it would be so high, but I am
    not familiar with NY state taxes, if any, which I
    presume are included in the "60%".

    > I read the instructions for W-4 and went through all
    > worksheets. According to those, not only she should
    > put 0 as the total number of allowances but she
    > should specify about $800 additinally withheld from
    > each paycheck.
    >
    > Our situation is simple: no mortgage, no kids, both
    > working, each making about 100K/year


    Under those circumstances, I would imagine that your
    tax liability will indeed be high. How do you know
    that the W-4 worksheet results are incorrect?

    > Can anyone help with this?


    You are not required to use the W-4 worksheet to compute
    your allowance, notwithstanding ambiguous IRS statements
    to the contrary. See IRS Pub 505 at
    http://www.irs.gov/pub/irs-pdf/p505.pdf , notably the
    section "Alternative method of figuring withholding
    allowances".

    In a nutshell, you can estimate your total tax liability
    for this tax year (that is, what you will file in 2006),
    then use the withholding tax tables to determine how much
    to withhold from each paycheck.

    Do the same for state withholding.

    << ======================================================= >>
    << The foregoing is intended for educational purposes only >>
    << and does NOT constitute legal OR professional advice. >>
    << It may not be relied upon for the purpose of avoiding >>
    << penalties that may be imposed on the taxpayer or the >>
    << tax preparer. >>
    << >>
    << The Charter and the Guidelines for submitting >>
    << messages to this newsgroup are at www.asktax.org. >>
    << Copyright (2005) - All rights reserved. >>
    << ======================================================= >>
     
    , Jun 27, 2005
    #3
  4. Han Guest

    > I live in New York City. I recently got married and my wife got a new
    > job. She has to fill out the W-4, but based on the worksheets on that
    > form, she can only claim 0 allowances. She was told in that case, about
    > 60% of combined taxes will be withheld from her paycheck. I read the
    > instructions for W-4 and went through all worksheets. According to
    > those, not only she should put 0 as the total number of allowances but
    > she should specify about $800 additinally withheld from each paycheck.
    >
    > Our situation is simple: no mortgage, no kids, both working, each
    > making about 100K/year
    >
    > Can anyone help with this?


    That could be right for NYC. The two of you need to
    generate deductible expenses, such as mortgage interest and
    real estate taxes.

    --
    Best regards
    Han
    email address is invalid

    << ======================================================= >>
    << The foregoing is intended for educational purposes only >>
    << and does NOT constitute legal OR professional advice. >>
    << It may not be relied upon for the purpose of avoiding >>
    << penalties that may be imposed on the taxpayer or the >>
    << tax preparer. >>
    << >>
    << The Charter and the Guidelines for submitting >>
    << messages to this newsgroup are at www.asktax.org. >>
    << Copyright (2005) - All rights reserved. >>
    << ======================================================= >>
     
    Han, Jun 27, 2005
    #4
  5. JoeTaxpayer Guest

    Re: Urgent: How many allowances to claim (married, both spouses working,

    wrote:

    > I live in New York City. I recently got married and my wife got a new
    > job. She has to fill out the W-4, but based on the worksheets on that
    > form, she can only claim 0 allowances. She was told in that case, about
    > 60% of combined taxes will be withheld from her paycheck. I read the
    > instructions for W-4 and went through all worksheets. According to
    > those, not only she should put 0 as the total number of allowances but
    > she should specify about $800 additinally withheld from each paycheck.
    >
    > Our situation is simple: no mortgage, no kids, both working, each
    > making about 100K/year
    >
    > Can anyone help with this?


    The W4 is really straightforward. Only 'gotya' I know of is
    it can't foresee AMT issues.

    Each exemption/allowance is $3200 of income that won't get
    taxed. You've not mentioned anything that would be a tax
    deduction, mortgage/property tax being the biggest. NY city
    and state are Schedule A itemized deductions, so you'd get
    some benefit there.

    The best advice I'd give you would be to get a copy of
    TurboTax and enter the numbers you expect to end 2005 with.
    If, after a few paychecks, something still seems wrong you
    can always adjust the withholdings.

    JOE

    << ======================================================= >>
    << The foregoing is intended for educational purposes only >>
    << and does NOT constitute legal OR professional advice. >>
    << It may not be relied upon for the purpose of avoiding >>
    << penalties that may be imposed on the taxpayer or the >>
    << tax preparer. >>
    << >>
    << The Charter and the Guidelines for submitting >>
    << messages to this newsgroup are at www.asktax.org. >>
    << Copyright (2005) - All rights reserved. >>
    << ======================================================= >>
     
    JoeTaxpayer, Jun 27, 2005
    #5
  6. Reed Guest

    Re: Urgent: How many allowances to claim (married, both spouses working,

    wrote:

    > I live in New York City. I recently got married and my wife got a new
    > job. She has to fill out the W-4, but based on the worksheets on that
    > form, she can only claim 0 allowances. She was told in that case, about
    > 60% of combined taxes will be withheld from her paycheck. I read the
    > instructions for W-4 and went through all worksheets. According to
    > those, not only she should put 0 as the total number of allowances but
    > she should specify about $800 additinally withheld from each paycheck.
    >
    > Our situation is simple: no mortgage, no kids, both working, each
    > making about 100K/year
    >
    > Can anyone help with this?


    Check the IRS w/h calculator at
    http://www.irs.gov/individuals/article/0,,id=96196,00.html
    It will capture your situation more accurately than the W-4
    worksheet. Although you may not like the result, you can get
    very close to zeroing out any payment/refund come April 15.

    Based on the info you gave above, 0+ $800 (weekly ?) may
    just be correct :-(

    Worse, you both may need to do the same if pay is same with
    no deductions etc.

    --reed

    << ======================================================= >>
    << The foregoing is intended for educational purposes only >>
    << and does NOT constitute legal OR professional advice. >>
    << It may not be relied upon for the purpose of avoiding >>
    << penalties that may be imposed on the taxpayer or the >>
    << tax preparer. >>
    << >>
    << The Charter and the Guidelines for submitting >>
    << messages to this newsgroup are at www.asktax.org. >>
    << Copyright (2005) - All rights reserved. >>
    << ======================================================= >>
     
    Reed, Jun 27, 2005
    #6
  7. Re: Urgent: How many allowances to claim (married, both spouses working,

    >> I live in New York City. I recently got married and my wife got a new
    >> job. She has to fill out the W-4, but based on the worksheets on that
    >> form, she can only claim 0 allowances. She was told in that case, about
    >> 60% of combined taxes will be withheld from her paycheck. I read the
    >> instructions for W-4 and went through all worksheets. According to
    >> those, not only she should put 0 as the total number of allowances but
    >> she should specify about $800 additinally withheld from each paycheck.
    >>
    >> Our situation is simple: no mortgage, no kids, both working, each
    >> making about 100K/year
    >>
    >> Can anyone help with this?


    > That could be right for NYC. The two of you need to
    > generate deductible expenses, such as mortgage interest and
    > real estate taxes.


    OH, and one thing more. Have children. Lots of them.
    That'll lower your taxes.

    However........

    ChEAr$,
    Harlan Lunsford, EA n LA
    (married with children)

    << ======================================================= >>
    << The foregoing is intended for educational purposes only >>
    << and does NOT constitute legal OR professional advice. >>
    << It may not be relied upon for the purpose of avoiding >>
    << penalties that may be imposed on the taxpayer or the >>
    << tax preparer. >>
    << >>
    << The Charter and the Guidelines for submitting >>
    << messages to this newsgroup are at www.asktax.org. >>
    << Copyright (2005) - All rights reserved. >>
    << ======================================================= >>
     
    Harlan Lunsford, Jun 29, 2005
    #7
  8. Re: Urgent: How many allowances to claim (married, both spouses working,

    >> That could be right for NYC. The two of you need to
    >> generate deductible expenses, such as mortgage interest and
    >> real estate taxes.


    > OH, and one thing more. Have children. Lots of them.
    > That'll lower your taxes.


    or hire a really really really expensive accountant.
    or lose your jobs.
    or maybe get divorced often.
    or...
    :)

    << ======================================================= >>
    << The foregoing is intended for educational purposes only >>
    << and does NOT constitute legal OR professional advice. >>
    << It may not be relied upon for the purpose of avoiding >>
    << penalties that may be imposed on the taxpayer or the >>
    << tax preparer. >>
    << >>
    << The Charter and the Guidelines for submitting >>
    << messages to this newsgroup are at www.asktax.org. >>
    << Copyright (2005) - All rights reserved. >>
    << ======================================================= >>
     
    Astound_invalid_64.85.239.19, Jul 1, 2005
    #8
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