S0 vs S1

[myrdale]

It is my understanding that ultimately, there should be no net difference in how I file. For the past 14 years I've always claimed S0 on my taxes. The government takes a chunk out each month, but then at the end of the year I'd get a decent sized check back. Then the reality hit me, that the refund I was receiving was because I overpaid the government in taxes, I was loaning them my money.

So on January 1, 2020, I switched to S1 for federal and state. My goal was to get as close to getting back $0 as I could.

With anticipation, I filed my taxes Friday. Not only did I meet my goal, I surpassed it!! I owed the government $1,200.

For 2021, I will be S1 for the first half of the year, and then S0 for the second half.

[Jluke]

Why not just have an extra $50 per month taken out?

Assuming you can select a dollar amount.

if you are paid twice a month select $25.

Once a month pick $50.

then you’ll owe around half if all else stays the same

[myrdale]

Why not just have an extra $50 per month taken out?

That is an option as well. If I go that route I'd just set it to $100 per month though and be done with it.

[myrdale]

Well that took exactly 2 minutes. Federal is now with holding an extra $100 per month, and state is an extra $10.

I'll let you know what it looks like in 12 months!

[kork13]

I really wish they would let us just specify the exact dollar figure we want withheld from a paycheck. Instead we have to do all of this IRS gymnastics with a fanciful number of "dependent exemptions" -- I have 3 dependents, but currently claim 6 with payroll, and probably need to bump it up to 8.

[kork13]

I really wish they would let us just specify the exact dollar figure we want withheld from a paycheck. Instead we have to do all of this IRS gymnastics with a fanciful number of "dependent exemptions" -- I have 3 dependents, but currently claim 6 with payroll, and probably need to bump it up to 8.

Okay, just kidding... I just went through the process of updating my withholding, and I forgot that the W4 changed significantly in 2020. It took 20 minutes of working through multiple IRS calculators, tax, and pay records.... and I'm now even more confused about how much will come out of my pay. They let you specify if you'll have outsized credits/deductions on your taxes, which is fine, but that number seems impossible to calculate on your own. I normally itemize with $35k+ of deductions. The amount their calculator told me to put in for a $0 tax refund? $9100.... No idea.... Ugh....

[Like2Plan]

Okay, just kidding... I just went through the process of updating my withholding, and I forgot that the W4 changed significantly in 2020. It took 20 minutes of working through multiple IRS calculators, tax, and pay records.... and I'm now even more confused about how much will come out of my pay. They let you specify if you'll have outsized credits/deductions on your taxes, which is fine, but that number seems impossible to calculate on your own. I normally itemize with $35k+ of deductions. The amount their calculator told me to put in for a $0 tax refund? $9100.... No idea.... Ugh....

Kork,

I was just thinking the same thing--about how the W4 has changed and how confusing it is to fill out "Under penalties of perjury..."

[kork13]

Kork,

I was just thinking the same thing--about how the W4 has changed and how confusing it is to fill out "Under penalties of perjury..."

Yup... And the online pay system obviously doesn't spit out exactly how much will be taken out, so I have to wait until April to see what's actually deducted, hope it looks reasonable, and correct later if needed. ::fingers crossed::

[LivingAlmostLarge]

I also withhold at like 6. Mostly because our taxes are bit wonky. it depends on stock price for us a lot. So what normally happens is it underwithholds on bonuses at 25% but we need to send in another 15%. But i like to have more monthly because the bonus makes us so much of our salary that i'd rather send in 20% when we used to get bonuses 4x/year. Makes for our monthly a little more even. Plus we are done with SS early and 401k contributions because of bonuses. So we personally do better just doing payments along the way. Last year I paid an extra $25k between sept-november.

The IRS doesn't exactly give you boxes to check that say "oh your salary is x, but your bonus is Y." What should we withhold at?

[HundredK]

I just wanted to point out, if you do the extra deductions, and you happen to have a job where you sometimes get small bonuses or reimbursements for things like wellness expenses, the extra deduction will still come out of those checks at the full amount up to the payment amount. I usually have a lot extra withheld near the end of the year, and I have to remember to do all my reimbursements from the employer before I put those extra deductions in place. Last year I forgot, and I submitted a $600 wellness reimbursement and got nothing because my extra fed tax amount was set to $900. So just a thing to be aware of that might seem surprising if it applies to you.

[kork13]

Okay, just kidding... I just went through the process of updating my withholding, and I forgot that the W4 changed significantly in 2020. It took 20 minutes of working through multiple IRS calculators, tax, and pay records.... and I'm now even more confused about how much will come out of my pay. They let you specify if you'll have outsized credits/deductions on your taxes, which is fine, but that number seems impossible to calculate on your own. I normally itemize with $35k+ of deductions. The amount their calculator told me to put in for a $0 tax refund? $9100.... No idea.... Ugh....

Yup... And the online pay system obviously doesn't spit out exactly how much will be taken out, so I have to wait until April to see what's actually deducted, hope it looks reasonable, and correct later if needed. ::fingers crossed::

HOLY SMOKES!! So I just got the copy of my pay stub for March that will process next week... My federal tax withholding crashed from $639/mo to only $136/mo.... That's definitely not gonna be right. Pretty sure I need to get around $500/mo withheld, but their bonkers new W4 system somehow took more detailed data & went totally sideways.

Soooo.... I'm gonna just go back to the "guess & check" method? So frustrating.

[MonkeyMama]

HOLY SMOKES!! So I just got the copy of my pay stub for March that will process next week... My federal tax withholding crashed from $639/mo to only $136/mo.... That's definitely not gonna be right. Pretty sure I need to get around $500/mo withheld, but their bonkers new W4 system somehow took more detailed data & went totally sideways.

Soooo.... I'm gonna just go back to the "guess & check" method? So frustrating.

Wow, how did you get that to work out?

I was trying for closer to $200/month. The only way I could get it to work was to add $40,000 *extra* in deductions, something crazy like that. The standard deduction is $24K-ish (MFJ), so you are just supposed to put how much extra deductions you have above that. Which in my case might be $4K, but it was withholding *way* too much tax.

But I do the payroll at my company so I just plugged in numbers until it worked. I was just thinking at the time, "Why have they got not rid of this insane form yet!?" It makes absolutely no sense, I say this as a tax professional. At least the old W4s I could make sense of. Not for lay people, but they made sense to me. This.... makes no sense whatsoever. I bent it to my will.

[kork13]

Wow, how did you get that to work out?

I was trying for closer to $200/month. The only way I could get it to work was to add $40,000 *extra* in deductions, something crazy like that. The standard deduction is $24K-ish (MFJ), so you are just supposed to put how much extra deductions you have above that. Which in my case might be $4K, but it was withholding *way* too much tax.

But I do the payroll at my company so I just plugged in numbers until it worked. I was just thinking at the time, "Why have they got not rid of this insane form yet!?" It makes absolutely no sense, I say this as a tax professional. At least the old W4s I could make sense of. Not for lay people, but they made sense to me. This.... makes no sense whatsoever. I bent it to my will.

Don't know if I've gotten it closer yet, but when I did the IRS calculator, it said to add $9100 in deductions. I plugged in $9000, and that's where I landed. Though I may have misunderstood, and counted my wife as an "other dependent" rather than assuming the MFJ accounts for her. So I updated my W4 to now only be MFJ, 3 dependents (actual number of kids), and only $2500 deductions. Hopefully that's closer when next month's pay comes out, but if not, I'll eliminate the additional deductions altogether.

You're lucky that you could mess with the payroll system to figure out what's right. Thanks for clarifying the standard deductions bit though -- I couldn't understand what that was all about. This is ludicrous...

[LivingAlmostLarge]

Wow, how did you get that to work out?

I was trying for closer to $200/month. The only way I could get it to work was to add $40,000 *extra* in deductions, something crazy like that. The standard deduction is $24K-ish (MFJ), so you are just supposed to put how much extra deductions you have above that. Which in my case might be $4K, but it was withholding *way* too much tax.

But I do the payroll at my company so I just plugged in numbers until it worked. I was just thinking at the time, "Why have they got not rid of this insane form yet!?" It makes absolutely no sense, I say this as a tax professional. At least the old W4s I could make sense of. Not for lay people, but they made sense to me. This.... makes no sense whatsoever. I bent it to my will.

I just let my husband fill out the forms and then make payments further in the year when i get a better sense of where we are landing income wise.

[MonkeyMama]

You're lucky that you could mess with the payroll system to figure out what's right. Thanks for clarifying the standard deductions bit though -- I couldn't understand what that was all about. This is ludicrous...

The other thing you can do is play around with paycheck city (google it). Is what I always did before. I don't know if they have updated for the newer W4.