W-4 Withholding

[Beaver24]

Good Morning,

I've posted about this before, but the IRS website seems pretty convoluted with information and doesn't necessarily help me out in anyway. Are there any tax professionals on here that have a formula that can be plugged into Excel, which will show exactly the amount that I can withhold without having to pay?

I've had this in the past, but have since left that position and lost access to it. My biggest issue is I rec'd a bonus which was taxed at 47%, and now they're decreasing our bonus percentage and increasing our base pay, which is providing us another large retroactive one-time payment.

Thanks for any help.

Beaver24

[GrimJack]

This an almost direct link to IRS' payroll calculator - if you would rather trust a '.com' try here or just google payroll calculator. They allow you to play with the results, make changes and see how it affects the end of the year.

[~bs]

you can just file 99 exemption and use a dollar amount in other amounts withheld. Take last year's tax liability, and divide by 24 or 26, depending on if your pay is bimonthly or biweekly, then enter it on the form. Much easier than attempting to use the IRS withholding tables. If you think your income will be say $10,000 less next year, subtract ($10,000 x your tax rate) from the total liability from last year, then divide.


I've been doing this for years without issue. If you file 99 exemption with the intent on evading taxes, you'll have an issue. If not, you'll be ok. This method is also good for someone whose pay fluctuates during the year, but they kind of know where they'll end up at the end of the year so the tax is spread evenly throughout the year. This is as opposed to the withholding tables, which assumes that bonus payment continues for the entire year, then overwithholds every time there's a spike in pay. In addition to forcing a fixed dollar amount calculation on the W-4, this is also used by people that pay no taxes, say someone earning very little or someone that get EIC taxes. The 99b basically indicates $0 withholding.