OK, I'm not sure how to pose this question accurately, so please forgive me if it's not clear and please ask me to clarify if it is not.
So, as it stands right now, I claim Married and 2 on my W-4 and I have 10% taken out of my pay for pre-tax 401k. I make $4491 per paycheck on a semi-monthly basis. There is $701 taken out as Federal Tax and I have a total of $618 taken out pre-tax ($449 401k + $169 in other pre-tax deductions).
What I would like to know is if I change my withholding to Married and 0 and increase my 401k contribution to 16% do these two changes "offset" my tax liability and essentially make my tax obligations the same?
The way I'm thinking is that I would normally have more tax taken out of my paycheck by dropping to 0 on the W-4; however, increasing my 401k by 6% reduces my taxable income so that the % of tax taken out of each paycheck stays the same, essentially.
Am I thinking correctly here??
So, as it stands right now, I claim Married and 2 on my W-4 and I have 10% taken out of my pay for pre-tax 401k. I make $4491 per paycheck on a semi-monthly basis. There is $701 taken out as Federal Tax and I have a total of $618 taken out pre-tax ($449 401k + $169 in other pre-tax deductions).
What I would like to know is if I change my withholding to Married and 0 and increase my 401k contribution to 16% do these two changes "offset" my tax liability and essentially make my tax obligations the same?
The way I'm thinking is that I would normally have more tax taken out of my paycheck by dropping to 0 on the W-4; however, increasing my 401k by 6% reduces my taxable income so that the % of tax taken out of each paycheck stays the same, essentially.
Am I thinking correctly here??