Looking at adjusting our withholding

[MillCreek]

So every year I crunch the numbers and look at our withholding to see if I should adjust it.  I noticed that between my wife and I combined, we now have almost $ 6000/month taken out of our paychecks for Federal (Income, FICA and Medicare) taxes. 

It turns out that I don't have to adjust our withholding, especially with the new mortgage later this year, but I am thinking it would be nice to have the MillCreek name painted on the side of a Forest Service dump truck or something as a token of appreciation.

[SADShooter]

A fine notion, but I can't begin to imagine how many GSA and other CFR sections it would violate, likely resulting in a (insert Federal agency) no-knock.

[Scout26]

If it will make you feel better, I passed a MillCreek semi truck and trailer on I-65 North on my way back from Indy yesterday.

 

[MechAg94]

It turns out that I don't have to adjust our withholding, especially with the new mortgage later this year, but I am thinking it would be nice to have the MillCreek name painted on the side of a Forest Service dump truck or something as a token of appreciation.

First, join the KKK and become an Exalted Cyclops or whatever they call it.  Then become a long term Democrat Senator from West Virginia.  Then you can get your name on stuff.  Gotta do all that in the right order. 

[sumpnz]

Having enough income to have $6k taken out each MONTH in taxes is what they call a good problem to have.  If they took out $6k in taxes from me I wouldn't be able to pay the mortgage or clothe the kids.  I could probably eat.  Not sure about the rest of the family, since they require gluten free (which is really expensive).

[RoadKingLarry]

I still want to know who this FICA guys is and why the hell he doesn't get his own damn job.

[T.O.M.]

SWMBO got a raise this year.  Around $5k, which is great.  Bumped us to the next square on the booklet.  Writing a check to Uncle Sam for just over $3k wasn't in the plans.  if it had been any higher, we'd have had to do a penalty and estimated quarterly.  Yeah, we adjusted our withholdings.  Don't want the refund, but don't want to be that far in the hole again.

I wish we paid $6K in taxes each month... That's just about what SWMBO makes (gross) in a year.

[MillCreek]

^^^This is the first time in two years that my annual merit increase has not been eaten up plus some by increases in the cost of our healthcare plan.  Although I think that renews in June, so the jury is still out as to if I will lose net income ground for the third year in a row.

[Firethorn]

So every year I crunch the numbers and look at our withholding to see if I should adjust it.  I noticed that between my wife and I combined, we now have almost $ 6000/month taken out of our paychecks for Federal (Income, FICA and Medicare) taxes. 

...Wow.  Somewhere between a half and a third of that is coming to me, in the form of my GI bill, but dang...

SWMBO got a raise this year.  Around $5k, which is great.  Bumped us to the next square on the booklet.  Writing a check to Uncle Sam for just over $3k wasn't in the plans.  if it had been any higher, we'd have had to do a penalty and estimated quarterly.  Yeah, we adjusted our withholdings.  Don't want the refund, but don't want to be that far in the hole again.

One of the outs is that as long as you paid as much into withholding as you had taxes last year, you can skip the penalty.  I had a problem when my taxable income dropped, but they dropped my withholding entirely by mistake for about 3 months.  1 was expected 2 I was telling them to fix it and they didn't, they finally fixed it the 3rd month, but by then it was too late...

[sumpnz]

One of the outs is that as long as you paid as much withholding as last year, you can skip the penalty.

I think the rule is that your withholding this year must be at least as much as your tax liability from last year to avoid a penalty, or requirement to file quarterly estimates, for under-withholding.  It also I think depends on whether you paid or got a refund the previous year, but that might not be the case.

One year we owed something like $7000 when April came around thanks to a corporate relocation that was also grossed up.  But we avoided any penalties since out withholding was probably a few thousand more than the previous year's total liability.

[Firethorn]

I think the rule is that your withholding this year must be at least as much as your tax liability from last year to avoid a penalty, or requirement to file quarterly estimates, for under-withholding.

This is actually the rule.  If you have as much withholding as your last year's tax liability, you're good.  Like I said, in my case it wasn't applicable because my taxable income had actually dropped.

On the other hand, 'deployed military and the finance office screwed up by NOT taking me off combat pay when I got back' is a pretty good excuse that, as I understand it, would have normally seen me get a waiver for it.

[Scout26]

Correct.  If this year's withholding meets or exceeds last year's total tax liability, then no penalty.