Payroll tax help

[Addicting]

I’ve been having issues with my employer and their accountant. They keep telling me nothing is wrong. Most of 2023 I didn’t pay federal taxes. I ended up switching my W4 to single and zero to have some taxes withheld so I’m not in a bind.


Now for 2024 I’m Married with 2 exceptions and $0 is being withheld for federal taxes again.

I had only one day and the Holliday pay on this pay period and my gross was $343. No federal taxes withheld again. Previous story is I didn’t make enough per pay period. I think that is total BS based on what I’ve read on the IRS website.

Is there anyone familiar with payroll taxes? @Big Fin

 

[npaden]

Is that pay period weekly, bi-weekly or semi-monthly?

 

[SD_Prairie_Goat]

I'm no expert, but that doesn't sound even remotely correct.

Be especially careful because if you aren't paying taxes in throughout the year, the IRS will add penalties on top of what is owed to them. For example, small business owners have to pay in quarterly what they estimate their tax bill to be to avoid those penalties. Then at the end of the year you true up with the IRS

 

[Addicting]

They told me seeing I have two kids claimed on my W4 that no taxes will be withheld until I make enough money to use up that 4,000 child credit.

Is that pay period weekly, bi-weekly or semi-monthly?

Weekly

 

[MtnElk]

I'll be honest mate, you need a personal CPA. If your taxes are easy, the cost to have a professional do them - and answer questions like this - more than pays for itself.

 

[npaden]

Even if it is weekly, $343 X 52 = $17,836. Standard deduction is $29,000. That is showing that you would not have taxable income so you wouldn't have any tax withheld.

It is going to look at each pay period independently. If you made $3,000 in a pay period it would look at $3,000 x 52 = $156,000 and it would have withholding that week.

 

[Addicting]

I'll be honest mate, you need a personal CPA. If your taxes are easy, the cost to have a professional do them - and answer questions like this - more than pays for itself.

As a military retiree I get our taxes done for free thru H&R Block. It’s never been an issue until this employer started doing this. I’ve never had a paycheck that didn’t have federal taxes withheld. It’s a completely new problem since I started here. I did start here the same time Biden took office so if his tax plan changed status quo that may be it too.

 

[woods89]

I'll be honest mate, you need a personal CPA. If your taxes are easy, the cost to have a professional do them - and answer questions like this - more than pays for itself.

My situation is a little different, as I am self employed, but I have found my small town CPA to be an immense help. It's actually a husband and wife team, he is licensed and she is not. It's funny, he holes up in the back and does a lot of the nuts and bolts, and she is the public facing part of the business. She is extremely knowledgeable, and I stop in and get advice frequently on a variety of business related topics.
The money I pay them every year is worth it in spades.

 

[Addicting]

Even if it is weekly, $343 X 52 = $17,836. Standard deduction is $29,000. That is showing that you would not have taxable income so you wouldn't have any tax withheld.

It is going to look at each pay period independently. If you made $3,000 in a pay period it would look at $3,000 x 52 = $156,000 and it would have withholding that week.

I will exceed that 29,000 by 15-20k. This pay period was only one days work plus some holiday pay.

 

[Addicting]

It is going to look at each pay period independently. If you made $3,000 in a pay period it would look at $3,000 x 52 = $156,000 and it would have withholding that week.

So 557.69 a week gross just to start the tax withholdings. Or is it 29,200 plus the 4000 exceptions for the kids?

How does the system know what my wife’s check is as her income is part of that 29,200 standard deduction.

Both of our weekly income combined exceeds that 557.

 

[npaden]

The way the W-4 works is that it assumes you are the only one working. If your spouse is working as well then most likely you need to claim "married but withhold at the higher single rate" on your W-4. Same with the kids. If she is claiming 2 and you are claiming 2 then essentially you are withholding based on having 4 kids. Either each of you put 1 down or one or the other put 2 but both shouldn't put 2 down.

I would bet most payroll software is doing the calculation correctly based on the information given, it is just that most people just claim married and how many kids without going through the calculations.

 

[npaden]

I will exceed that 29,000 by 15-20k. This pay period was only one days work plus some holiday pay.

Married with 2 kids, your combined family income is going to need to be $66,200 before you owe any taxes in 2024.

First $29,000 gets eaten up by the standard deduction, next $23,200 is at 10% so that will eat up $2,320 of your child credits, next bracket is 12% so you will need to make $14,000 more to eat up the rest of the child credit. Anything you make over $66,200 will be taxed at 12% up to $94,300.

 

[SAJ-99]

How does the system know what my wife’s check is as her income is part of that 29,200 standard deduction.

It doesn’t. @npaden can confirm, but in this case you can change the withholding, but the std deduction is large. I think you can also elect to have a certain amount extra withdrawn each paycheck. Also, last resort, you can mail the IRS an estimated tax payment each quarter. It’s little more work but it will ensure you don’t have a big bill at April 15 deadline.

 

[npaden]

P.S. - I missed the $200 on the standard deduction for 2024, it is $29,200 so you would actually have to make over $66,400 combined before owing any tax.

 

[Addicting]

Married with 2 kids, your combined family income is going to need to be $66,200 before you owe any taxes in 2024.

First $29,000 gets eaten up by the standard deduction, next $23,200 is at 10% so that will eat up $2,320 of your child credits, next bracket is 12% so you will need to make $14,000 more to eat up the rest of the child credit. Anything you make over $66,200 will be taxed at 12% up to $94,300.

That makes sense, wish my employer would of explained it like that.

 

[npaden]

It doesn’t. @npaden can confirm, but in this case you can change the withholding, but the std deduction is large. I think you can also elect to have a certain amount extra withdrawn each paycheck. Also, last resort, you can mail the IRS an estimated tax payment each quarter. It’s little more work but it will ensure you don’t have a big bill at April 15 deadline.

There is a big long worksheet that you can go through to figure out what you should put down on your W-4. It isn't just a simple, "I'm married and I have 2 kids".

I've seen W-4's with people claiming 10+ dependents and I've seen W-4's with married people claiming married but withhold at the single rate and zero dependents plus having additional amounts taken out of each check. The payroll system is just going to look at the numbers on the W-4 and do the calculation based on that. Based on each individual paycheck. It doesn't even go backwards and remember what you made last week, it just looks at that one paycheck and does the math.

 

[Addicting]

It isn't just a simple, "I'm married and I have 2 kids".

I’ve tried using the IRS worksheet online and frankly it was PIA. I have my W4 set up with the kids and hers set up as zero, with both married filing jointly.

With no other taxable income that should make it close to correct. However, we seem to get a decent refund every year. I have grown to hate this system in the last few years.

 

[SAJ-99]

There is a big long worksheet that you can go through to figure out what you should put down on your W-4. It isn't just a simple, "I'm married and I have 2 kids".

I've seen W-4's with people claiming 10+ dependents and I've seen W-4's with married people claiming married but withhold at the single rate and zero dependents plus having additional amounts taken out of each check. The payroll system is just going to look at the numbers on the W-4 and do the calculation based on that. Based on each individual paycheck. It doesn't even go backwards and remember what you made last week, it just looks at that one paycheck and does the math.

I think @Addicting is having the same problem I have had for years. One system doesn't know what the spouses income will be and only does the tax calc on what it knows. It can be hard to figure out on a W4 or the app. If the income is pretty steady it is easier. Once it gets variable, I found it was easier to just do the calc myself and send them a check.

 

[Addicting]

I think @Addicting is having the same problem I have had for years. One system doesn't know what the spouses income will be and only does the tax calc on what it knows. It can be hard to figure out on a W4 or the app. If the income is pretty steady it is easier. Once it gets variable, I found it was easier to just do the calc myself and send them a check.

I retired from the military in 2020 and everything was steady up to that point. Afterwards it’s been a roller coaster ride with income, IRA penalties, and taxes. This year it should go back to steady as there are no major changes or IRA’s to deal with.

I rode out 2023 with the zero withheld as the first few months were messy from a final withdrawal under that Covid relief exemption.

I expected 2024 to start with some money being withheld each pay period. With this first period skimpy it kind of threw me for a loop on it.

 

[Big Fin]

@npaden has it nailed. If you have a working spouse or significant outside income, don't just rely on the IRS tables. As he said, those tables assume the income to be considered is what your employer is paying you, and thus, calculates withholding based on that.

Many dual income couples end up under-withheld. Both indicate on their W-4 that they have three kids and are married. Thus two combined W-4s give the appearance of 6 kids, four spouses, and two standard deductions. If you have a dual income household, make sure you adjust your W-4 for additional withholding to avoid penalty at year-end.