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My first question is How is the Green Dot prepaid Discover Card? Hoping for any comment. Another question I got... I'm trying to figure out the withholding that's best for my situation in 2010.. |
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That's a good question. I'm not sure what is the answer. I'll do some poking around and get back to you if I got an anything. You should email the people at Discover Card as they probably could give you an answer..
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Any refund you get from the government is an interest free loan for up to 12 months. People getting refunds on their State of CA returns are giving their state even more time.
Check with your HR department, they can adjust it for you so there should be very little over/under payment. Most people withhold WAY to much... |
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If you are paid weekly, you need to cut your withholding about $22 per check to come out with zero refund, assuming no other changes..
I'd play around with the withholding calculator on the IRS site to see what you come up with by changing to "1", etc.. Instead of looking at the actual numbers the calculator spits out, pay attention to the difference in withholding numbers. If going from "0" to "1" results in about $22 less being withheld, that'd be a good bet to try.. What is MY withholding? Uh...way too much.. I have a mess, having to make quarterly payments on my own biz + having more withheld from my other job. I don't know what my final situation will be until the year is over, so setting the right withholding numbers is a bit of a challenge... |
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< Single, No Mortgage, Above Average Income. I am the most highly taxed demo in the country...
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Whatever adjustment you make to your W4, remember that you can change that whenever you want. Halfway through the year check to make sure you're on target, and adjust if necessary. Then again a couple months from the end of the year...
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I put (9 deductions) then a specific price for STATE and FEDERAL.
FEDERAL $XXX. STATE $XX. All you have to do is figure out what your total tax cost was for last year and do some MATH (based on the total number of paychecks). I only get 26 per year. If you got one a week divide the total tax liability you paid by 52. REFUND. = INTEREST FREE LOAN TO THE STATE and FEDERAL GOVERNMENTS. This post has been edited by. GEORGE. : 11 January 2010 - 11:54 AM.. |
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It seems like they changed the IRS calculator a little, and it's actually confusing me quite a bit..
If I enter my info as "single" with a salary of "31,330" and claiming "0" dependants, I get this:. And if I change the dependants to "2", I get this.... That seems to be just saying, "oh, you have two dependants? you'll pay less taxes...". Basically, it's not giving me any options to find out "how much will I pay in taxes this year" if I claim 0, 1, 2, 3... etc... just how much I will owe at the end of the year... |
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Here's a "typical" paystub for me (no OT, Vacation, Holidays...).
Fed. Wages: 556.50. Federal Tax: 59.67. Soc. Security: 34.51. Medi Care: 8.07. State Tax: 27.46. I once knew of a calculator that would calculate what your taxes would be each week for various withholdings, but I can't find it anymore..... |
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You use an "allowance" to reduce the amount they withhold from your check. As you can see frmo the info there, each allowance reduces the tax you're paying (with Discover card) by about $500 a year. So add 2 allowances to whatever you currently have (none?) and you're set..
Right?.. |
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"Allowances" and "Dependents" aren't the same thing..
What the IRS is telling you, is based on your Single status, and your income, you should take 2 allowances for your income to be as close as possible to the proper amount.. You have no dependents, so you dependents should indeed be 0 (unless you have a child or parents that you care for, and provide the majority of the support for).. 2 allowances is probably a good fit for you. Depending on your overtime, your withholding may be a touch too high. With 3 allowances, you'll most probably be underpaid a bit, though it's difficult to tell by how much.. Its worth noting, being underpaid is ok, provided your withholding covers at least 90% of you total tax for this year, or 100% of last year's tax (110% for higher income taxpayers). You may owe a bit of money in April, but you'll incur no penalties or interest as long as you pay the balance in full by 4/15. In this regard, state rules vary substantially, so you'll want to check your state's treasury site for the safe harbor rules... |
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Is there a problem if you are at 90% for several consecutive years?..
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W4 form.
Assuming single and no dependents, one job only: 2 allowances. According to the linked IRS pub for 2010:. Each withholding adjusts weekly wage subject to federal withholding by 70.19. So 556.50 - 70.19*2=416.12. For single, the following withholding calc applies:. Under $116 0%. $116-$200 10% of amount over $116. $200-$693 $8.40 + 15% of amount over $200. So for the above example with 2 allowances: weekly Fed w/h = $8.40 + 0.15*(416.12-200)=$40.82. When you got a refund last year, I am assuming you got a standard deduction, but have you added dependents mid-year or add dependents and change filing status to head of household? That could lead to an overpayment > refund.. Did you qualify for EITC (working parent claiming child as dependent?) That can significantly reduce your tax liability. To get. Advanced EIC, fill out W5. .. This post has been edited by. Nothingtolose. : 11 January 2010 - 12:58 PM.. |
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Federal underpayment penalty rules.
:. Some states have different rules for figuring underpayment penalty for state tax... |
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Thanks for all the info!.
One last question:. Is a W-4 form something I can get at a post office? Or where? I think someone lost all our copies at work, and I don't have a home printer... |
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Its available from IRS.gov, and someone at work should be able to get you a copy. I'm pretty sure HR is required to have them around. They should certainly allow you to print a copy at work if you ask...
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Generally no, provided this provision is still in place:.
Keep in mind, the 90% rule is based on your current year tax, so for 2009, you have to have 90% of the tax due on your 2009 return paid in ratably over the course of the year. Problem being, your 2009 return isn't due until April of 2010, and you can't be sure what you'll owe in taxes until your return is done. Additionally, some of the legislation relating to a tax year isn't finalized until late in the year (AMT patches have been a problem in recent years, though the hot issue for 2010 is the Estate Tax).. There are really dozens of factors and rules that come into play, and depending on your situation, you may benefit from using one method over another... |
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Here is what I found to be the best combination of tools for calculating this. First, the IRS has a tool on their website that can estimate your total federal tax due for the year using a withholding calculator.
Http://www.irs.gov/i...d=14806,00.html. Also, they have links to the tables employers use to calculate how much should be withheld from your paycheck each week, based on your salary and allowances.. Http://www.irs.gov/p...5.pdf?portlet=3. And for excel files. Http://www.irs.gov/p...6.pdf?portlet=7. Using these, you should be able to select the right number of allowances for your filing status and salary to end up with a close to 0 refund/balance owed... |
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Ouch, I withhold $0.
I do have to pay it in quarterly, but at least I get to see the cash... |
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On W-2s it is easier to "set it and forget it" (for us anyway.
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Last year I was almost charged an underpayment fee. I can't remember what it was, but it was a fee and I'd rather not owe more money because I wanted to keep more of it all year. Yeah yeah, interest free loan to the government...blah blah blah. I'd rather give them an interest free loan than have to pay them even more taxes/fee's for not giving them the interest free loan..
Plus, I've never been good at saving money. I like having a "bonus" once a year. The trustee will likely take my refund this year though... |
