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Old 10-11-2014, 10:04 PM   #1
sonnyjane
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Paging TAXGUY and any other tax folks...

I'm having a bit of a panic attack over here and was hoping you could shed some light on what's going on.

I changed jobs in January. The new job makes considerably less money (by about half) per paycheck. The old job withheld taxes properly and I always got a refund. With the new job, I think something is really wrong.

I'm married but always choose to withhold as if I was single. So far at new job I've made about $15,000 YTD, but have only had about $650 withheld in federal taxes for the entire year. That's only 4% being withheld even though I'll be in the 15% tax bracket by the time my husband and I file taxes.

In other words, I think I'm going to owe A LOT of money at tax time! I can see my pay stubs online and it's correct with just 1 exemption. I asked our payroll person about it a few months after being hired but all she could offer was that the exemptions were correct on my W-4. Does anyone have any input?

Thanks!

Last edited by sonnyjane; 10-11-2014 at 10:09 PM.
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Old 10-11-2014, 10:25 PM   #2
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If you can budget to do without some more of your paycheck, you can ask the payroll person to withhold an extra $$ specific amount. Our payroll software doesn't hold out enough, and I got a really bad shock in April; I immediately told the comptroller to hold out $xxx extra from my check every week. You would have to give up quite a chunk since this is already mid October, but that is what I would advise.
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Old 10-11-2014, 10:30 PM   #3
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Quote:
Originally Posted by sonnyjane View Post
I'm having a bit of a panic attack over here and was hoping you could shed some light on what's going on.

I changed jobs in January. The new job makes considerably less money (by about half) per paycheck. The old job withheld taxes properly and I always got a refund. With the new job, I think something is really wrong.

I'm married but always choose to withhold as if I was single. So far at new job I've made about $15,000 YTD, but have only had about $650 withheld in federal taxes for the entire year. That's only 4% being withheld even though I'll be in the 15% tax bracket by the time my husband and I file taxes.

In other words, I think I'm going to owe A LOT of money at tax time! I can see my pay stubs online and it's correct with just 1 exemption. I asked our payroll person about it a few months after being hired but all she could offer was that the exemptions were correct on my W-4. Does anyone have any input?

Thanks!
Based on the numbers given, extrapolating it out to 12 months, if you were filing single, using standard deduction and exemption, you would owe ~$157.00 in taxes, as some of your income would be taxed at 15%.

If you're going to file as married jointly, then the key is going to be how much your husband is having taken out. Remember that your effective rate won't be 15%, because you'll have deductions and exemptions, and part of your income will be taxed at 15%.

I would take a look at your husband's withholding and do a quick calculation. You still have time a little time to up your withholding, if necessary.
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Old 10-11-2014, 10:30 PM   #4
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Originally Posted by Pamlur View Post
If you can budget to do without some more of your paycheck, you can ask the payroll person to withhold an extra $$ specific amount. Our payroll software doesn't hold out enough, and I got a really bad shock in April; I immediately told the comptroller to hold out $xxx extra from my check every week. You would have to give up quite a chunk since this is already mid October, but that is what I would advise.
Ugh. So you think it's a software thing? We use ADP for payroll I feel like that should be pretty accurate?!?
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Old 10-11-2014, 10:36 PM   #5
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Ugh. So you think it's a software thing? We use ADP for payroll I feel like that should be pretty accurate?!?
It is accurate - it's taking out the right amount of money based on what you told them - withhold based on filing single.
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Old 10-11-2014, 10:39 PM   #6
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Based on the numbers given, extrapolating it out to 12 months, if you were filing single, using standard deduction and exemption, you would owe ~$157.00 in taxes, as some of your income would be taxed at 15%.

If you're going to file as married jointly, then the key is going to be how much your husband is having taken out. Remember that your effective rate won't be 15%, because you'll have deductions and exemptions, and part of your income will be taxed at 15%.

I would take a look at your husband's withholding and do a quick calculation. You still have time a little time to up your withholding, if necessary.
OHHHH I didn't realize they take that into account when withholding mine. I figured it just factored into the refund. He gets nearly $800 per month withheld.
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Old 10-11-2014, 10:45 PM   #7
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OHHHH I didn't realize they take that into account when withholding mine. I figured it just factored into they refund. He gets nearly $800 per month withheld.
The only thing that is taken into account in your withholding is what you have on your W-4. They know nothing about what your husband makes or what his withholding is. You told them to withhold at single rate, so they're doing that based on an estimate of what you would pay if you were filing single.
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Old 10-11-2014, 10:46 PM   #8
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The old job withheld taxes properly and I always got a refund.
Not sure they withheld them property if you got a refund, to properly do withholding you should either owe nothing or just a little so the government doesn't get use of your money for free.

I have always found the tax withholding tables to be a waste of time. I always used to have a specific percentage withheld that put me within about $100 either way of my tax owed. But the IRS banned that, so either I owe $1,500 or have a $1,500, my CPA ran every possible withholding option through his computer, and with my tax situation, nothing will get me close to what I actually will owe.
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Old 10-11-2014, 10:48 PM   #9
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Not sure they withheld them property if you got a refund, to properly do withholding you should either owe nothing or just a little so the government doesn't get use of your money for free.

I have always found the tax withholding tables to be a waste of time. I always used to have a specific percentage withheld that put me within about $100 either way of my tax owed. But the IRS banned that, so either I owe $1,500 or have a $1,500, my CPA ran every possible withholding option through his computer, and with my tax situation, nothing will get me close to what I actually will owe.
The IRS banned certain withholding? Sorry, but I find that hard to believe. You can specify certain amounts to be withheld; we do that, and adjust it annually so that we're within a couple of hundred dollars either way.
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Old 10-11-2014, 10:51 PM   #10
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The only thing that is taken into account in your withholding is what you have on your W-4. They know nothing about what your husband makes or what his withholding is. You told them to withhold at single rate, so they're doing that based on an estimate of what you would pay if you were filing single.
Ok I'm tracking now. Since I went from full-time to part-time I'm in a lower bracket and think I should come out okay since he is having so much withheld. Had a small freak out there for a second.

Thanks for your help!
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Old 10-11-2014, 11:00 PM   #11
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The IRS banned certain withholding? Sorry, but I find that hard to believe. You can specify certain amounts to be withheld; we do that, and adjust it annually so that we're within a couple of hundred dollars either way.
All I know is my employer told me the IRS no longer allowed it and when I called the CPA who does my taxes, he said that was correct. He seemed to think the change came from employer complaints that not employees not using the withholding tables were making more work for them.
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Old 10-11-2014, 11:06 PM   #12
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All I know is my employer told me the IRS no longer allowed it and when I called the CPA who does my taxes, he said that was correct. He seemed to think the change came from employer complaints that not employees not using the withholding tables were making more work for them.
I have withholding done at single rate, and then have them take an additional fixed amount every pay period. I've been doing it for years with no problem whatsoever, so if your employer won't allow it, it's not the IRS, it's the employer.
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Old 10-11-2014, 11:23 PM   #13
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I have withholding done at single rate, and then have them take an additional fixed amount every pay period. I've been doing it for years with no problem whatsoever, so if your employer won't allow it, it's not the IRS, it's the employer.
Okay, I think you are misunderstanding me. You can have an additional amount withheld on top of your withholding status. What I was doing was bypassing the entire exemption system by claiming an exemption to withholding and having a specific percentage withheld.
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Old 10-11-2014, 11:26 PM   #14
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Okay, I think you are misunderstanding me. You can have an additional amount withheld on top of your withholding status. What I was doing was bypassing the entire exemption system by claiming an exemption to withholding and having a specific percentage withheld.
Ah, got it.

You can accomplish the exact same thing, i.e., have a specific percentage withheld, buy using single and an then a flat amount on top of it. So long as your paychecks are pretty consistent throughout the year, the effect is the same.
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Old 10-11-2014, 11:44 PM   #15
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Originally Posted by sonnyjane View Post
I'm having a bit of a panic attack over here and was hoping you could shed some light on what's going on.

I changed jobs in January. The new job makes considerably less money (by about half) per paycheck. The old job withheld taxes properly and I always got a refund. With the new job, I think something is really wrong.

I'm married but always choose to withhold as if I was single. So far at new job I've made about $15,000 YTD, but have only had about $650 withheld in federal taxes for the entire year. That's only 4% being withheld even though I'll be in the 15% tax bracket by the time my husband and I file taxes.

In other words, I think I'm going to owe A LOT of money at tax time! I can see my pay stubs online and it's correct with just 1 exemption. I asked our payroll person about it a few months after being hired but all she could offer was that the exemptions were correct on my W-4. Does anyone have any input?

Thanks!
You will have to figure out an extra amount to add to your W4 to be with held. I add an extra $300 per week to keep about even. You can do that or make quartlerly estimated payments.
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