February 14th, 2016
TAX TIP OF THE DAY... how to adjust your W-4 withholding at work
Recipe to adjust withholding at just one job... choose the job with the highest pay. See very bottom if you need an easier way.
STEP 1: Ignore IRS instructions on the form. Do not complete the top 1/2 of the page. Start 1/2 way down the page at your name. Ignore page 2.
STEP 2: Determine the "total tax" amount from the most recent Federal tax return filed (2015 1040 page 2, line 63). $________
STEP 3: Determine the amount of "total payments" (2015 1040, page 2, line 74). $________
STEP 4: Determine the amount of Federal withholding from your most recent W-2 for the the one job you are adjusting. $________
STEP 5: Desired W-2 withholding for this job = Step 2 MINUS Step 3 PLUS Step 4 PLUS $1,000. $______
STEP 6: Desired withholding %. Take Step 5 amount and divide by Federal wages box 2 of the most recent W-2 for the job you are adjusting and muliply x 100. _____ %
Now comes the trial and error part. Start with your current W-4 setting. If you need more withholding... decrease the number by 2. If you need less withholding then increase the number by 2. On your first full paycheck with the new withholding setting, check the percentage of withholding to the gross pay. Is it close to the desired percentage in Step 6?
If not adjust further by 2 in either direction.
IS THERE A SIMPLER WAY?
YES, have your tax preparer do this for you!
SHARE WITH A FRIEND.
If you need a tax appointment... www.baboiancpa.com
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David S. Baboian, CPA