Like the title says, from the filing process and tax questions to tax policy and reform, you can search and share All Things Tax here. This is the place to find answers to all your general questions that don't fall under the other categories. And just a reminder: questions about software or online filing should be posted in DIY Products.
01-30-2017 11:27 AM
I always end up owing taxes at the end of the year. What allowances do I claim if I have two jobs to either break even or have no amount OWED???
I do not know what allowances to claim at which job & always pay taxes @ years end. FT Job =$43529/yr currently listed as 1 allowance & PT job = $19148/yr with 0 allowances. HELP me to figure out what to claim on my W-4 as allowances for each job to ensure I DO NOT OWE EVER AGIAN??
01-30-2017 01:50 PM
Welcome to the community.
Let's take a look at this and see if we can't get you enough withholdings.
So we have two jobs. One income is $43,529 and the other provides an additional $19,148 worth of income. That's a total of $62,677 worth of income, so you're in the 25% tax bracket and you definitely need maximum withholdings. You need to claim 0 exemptions from both jobs & possibly request additional withholding on top of that, and I'll show you why in a moment.
Your tax liability on $62,677 (of which $52,327 is taxable) taking into account only the standard deduction for a single taxpyer and your personal exemption is $8,853.
Your tax withholding with zero exemptions is 10%, so that would give you $4,353 on your first income amount and $1,915 on your second income amount. That's a total of $6,268 in withholdings. So based on this, you're still $2,585 short. For a breakeven you'll want to have an extra $50 per week taken out of your pay from the job that provides the most income. You can request the additional withholding by filling out a new Form W-4 for that job.
With all of that said this is ballpark but not 100% accurate because I haven't asked you about any credit that you may be eigible for yet, etc. If you can answer a few questions for me I'll recalculate this according to your exact tax situation.
I hope this helps you out & I'll be glad to answer any other questions you may have.
Senior Tax Advisor (Tampa, FL)
01-30-2017 02:12 PM
01-30-2017 07:22 PM
Hello, thank you for the feedback. To answer your questions;
Related to the last question I have an Americorps scholarship which I can use to pay tuition. This is counted as income and makes my gross income appear higher. If I do access those funds for school how to I avoid having to pay out of pocket for monies that are actual income?
01-30-2017 07:37 PM - edited 01-30-2017 07:38 PM
You're welcome Jrodumosu.
I did the previous calculations based on a single taxpayer with no dependents, credits, or deductions. So the figures I gave you before are actually concrete. I believe you meant 1098-E deduction for student loan interest payments, and that will reduce your taxable income by a maximum of $2,500 which unfortunately will have very little effect. You would still be looking at tax on $50,000 worth of income which is $8,278.
So you would need to claim 0 exemptions for both jobs and then you would need either $50 a week or $100 every two weeks if you're paid bi-weekly in extra withholdings to break-even. You could request all of the extra withholdings from one job or request some from each job. There's no right or wrong way work that. Of course if there was a change in your life such as marraige or buying a house, or having a kid, then you would have other tax benefits to take advantage of and it might be different.
If you were referring to the education tax credits then that's different. An education credit will reduce your tax liability dollar for dollar and that could make a fairly big difference.
05-08-2018 07:47 PM
05-08-2018 10:12 PM
I have 2 jobs, a full time position that pays around 24k a year and a season job the gets me an additional 2-3k a summer. Last year I had to pay in some on state tax I believe. How should I claim this year to receive a refund or not have to pay in. I'm single, no dependents.
To change your withholding, you need to fill out a new W-4 and the equivalent form for your state. Here's a link to the Federal W-4: https://www.irs.gov/pub/irs-pdf/fw4.pdf . Based on the information you've given, if you follow the instructions including the multiple jobs worksheet on Page 4, you'll end up with it telling you to claim Single with 1 allowance.
To see if your having enough withheld you need to get a good estimate of the amount of tax you're going to owe. You can do this by doing the following:
(I'm going to assume 3k for the summer since that'll be the scenario where you owe the most tax.)
1) Take your total expected income for the year: $27,000
2) Subtract your standard deduction (assuming you're under 65 and not blind): -$12000
3) Total taxable income: $15,0000 ($27000-12000)
4) Look at the tax tables to figure out how to figure your tax (for other tax brackets, I've had good luck w/this site: https://www.forbes.com/sites/kellyphillipserb/2018/03/07/new-irs-announces-2018-tax-rates-standard-d... )
For Single individuals:
If your Taxable Income is Between: The Tax Due is:
0-$9,525 10% of the taxable income
$9,526-38,700 $952.50 + 12% of the amount over $9,525
$38,701-82,500 $4453.50 + 22% of the amount over $38,700
$82,501-$157,500 $14089.50 + 24% of the amount over $82,500
5) Calculate the tax you'll owe: Since your taxable income is $15,000, you'll fall in the $9526-38700 range and you'll calculate your tax using the formula: $952.50 +12% of the amount over $9525. (This is because you'll pay 10% on the first $9525= $952.50+ 12% on the amount over that.)
So, $952.50 + 12% (15,000-9,525) = $952.50+ 12% (5,475) = $952.5 + $657 = $1609.50. <--- this is your target withholding from all of your 2018 paychecks to "break-even" at the end of the year when you file your taxes.
Then you need to figure out if your current rate of withholding is going to cover that amount.
If you are claiming Single with 1 allowance, it's likely that your regular employer is withholding a total of about $145/month. This would mean that your total being withheld for the year will be about 12*$145= $1740. This would cover the tax you owe $1609.50 (calculated above), and you'd get about $130 back ($1740 paid- $1609.50 owed) as a refund when you file your taxes. This doesn't take into consideration the income tax your seasonal employer is going to withhold. If you also claim single with 1 allowance on your W-4 for that job, they're going to withhold about $35/month (assuming $1000/month income from that job). It's likely that all of this will end up being refunded to you when you file your taxes since the withholding from your main job will cover what you owe. At your income level, each additional allowance you take will decrease your withholding about $35-40/month that it is in affect. So, if you didn't want your seasonal employer to withhold any tax, you could claim single with 2 allowances. I would not recommend doing this with your main job, because reducing your withholding by $35-40/month for all year will reduce your total withholding below what you'd owe.
If you've been claiming single with a different number of allowances, it'd be useful to know what you've been claiming, how much you've already had withheld, how much is being withheld per paycheck and how often you're paid. (All of this info is likely available on your latest pay stub.)
For your state:
Each state is different, so you'd need to look at your state's Employee Withholding Allowance Certificate to determine what to claim there. If you owed last year and your state hasn't changed their tax code, you could take the amount you owed, and divide it by the number of paychecks left in the year to get an additional amount to have withheld from each paycheck for the rest of the year. You'd want to complete a new Withholding Allowance Certificate form for your state claiming the same filing status (Single) and exemptions with the "additional amount you want withheld from each paycheck" or whatever your state's equivalent is equal to the amount you just calculated.
If you'd like to send more details in a private message, I can help you in more detail.