How the W-4 Sets Millions Of People Up For Tax Failure (Avoiding W-4 Traps)
Vložit
- čas přidán 22. 08. 2024
- 3 Glaring flaws with the current Tax Form W-4 and how to avoid these tax traps.
How to fillout your W-4: • How to Fill Out the Ne...
IRS Publication 15-T:chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/www.irs.gov/pu...
IRS Tax Withholding Estimator: www.irs.gov/in...
Chapters (Time Stamps):
1:05 What is the purpose of the W-4?
1:28 3 ways this form sets us up for tax failure
3:25 How to determine how much tax to withhold per pay period?
4:32 How to calculate withholdings before receiving your first paycheck?
7:11 Quick way to project your tax liability
Other related videos:
• What Is My tax Rate? (...
- Making tax estimate payments - • Estimated Tax Payments...
- Tax estimate rules explained: • Estimate Tax Payment R...
- Calculating tax estimates : • Estimated Taxes - Neve...
- Tax withholdings: • How Do Tax Withholding...
Chapters (Time Stamps):
1:05 What is the purpose of the W-4?
1:28 3 ways this form sets us up for tax failure
3:25 How to determine how much tax to withhold per pay period?
4:32 How to calculate withholdings before receiving your first paycheck?
7:11 Quick way to project your tax liability
Got to admit when they changed the W4 to accompany the ‘18 tax law, a lot of clients were out in left field. It is an odd fish form.
For years so many people knew what S-1,M-2, and to add extra withholding, meant. Even the old way filling out the W4, that chart above the w4, people were coming up with S-6 or M-8. Even with this new form, it’s like the W4 is asking people to calculate their taxes on the spot and most are clueless.
I tell clients I like to see at least 10% withholding rate others 12-15%, depending on income. Not to mention 3-4% for our state. I often tell clients to check their percentages on their paystubs to see what percentage is being withheld. That is so important.
I often calculate an effective tax rate from the return and compare that to a withholding rate from the w-2. When there is more than one w-2 you can easily see what W-2 is short in withholding and what spouse needs to increase their withholding.
I’ve gotten quite a few clients making Estimated payments on EFTPS. That way they can make payments as often as they want. They can easily print that out for tax time. I prefer this over the 1040 ES and mailing payments. I am not trusting the mail or the service with processing paper. Once they make a couple of deposits it is a fairly easy system to use.
Thanks again for this important video. A lot of people have asked me to fill out the w4. Geez. Now I can recommend this video!
Great insights Dan. I appreciate you dropping your professional wisdom. It is so important people are aware of their withholdings. Anything to keep them out of debt with the IRS. I think what adds to the confusion is there are so many different ways to approach the issue it becomes overwhelming to the client. I always try to find the simplest way I can to explain it to them so they remedy the situation with the least amount of changes possible.
I worked for a small company where I got paid the same each week. When a pay change was coming, my boss would give me a sheet with the minimum amounts he had to take from my pay. I would write in the numbers I wanted him to withdraw. This was because of investment income gains. This worked very well. The accountant stopped by to tell me that I was having way too much withheld. I told her about my expected investment income. I now make quarterly payments. I keep a spreadsheet with my estimated income. As the year goes by, I exchange the estimated numbers for the real ones and I adjust my withholding at the end of the year accordingly. I'm working on my investment tax efficiency.
Dave thanks for sharing your story here. Hands down estimates are the way to go for all other forms income aside from wages and retirement distributions. Estimates are far more flexible and less work to manage.
Great video as always. Thanks Mike!
Thank you Nghi! Really appreciate it brother :)
How to fillout your W-4:czcams.com/video/_VPjX0dDTgs/video.html
IRS Publication 15-T:chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/www.irs.gov/pub/irs-pdf/p15t.pdf
Great information l’m pretty sure only people that would of paid attention was a account great video!
Glad it was helpful! Thanks Susie :)
Defnately sharing this one with couple friends whom approached me regarding this form lol thanks mike
Thanks Maria! more to come on this subject in my next video.
My employer said the irs pub said by using the irs pub 15T they cannot take out any federal taxes. I have worked there three years and this is the first time they said any thing about 15T. So I just started searching up on it and found you. I have paid out about 3K plus penalties and interest every time. It's 4your am so I will watch your video a few more times and w4 videos. Thank you. Due you do out of state taxes?
Thanks for good information, yes ! I love your video and I use your videos to understand tax system.
Hellyeah! I got another 20 years with the city before i retire. Im about to bring in new i come toincrease my SS payments since this job does not. I just need another 7 years of income to maxx my SS when i retire at 65.
Love it! Thank you as always for providing such insight info. Video suggestion: can you show us how to do taxes when you’re a cash earner? My uncle doesn’t get paid a 1099 or W2 from any of his jobs and has worked as a handyman for years now. Just found out he hasn’t done taxes for the past 5 years. I tried to help him but I don’t know where to start. He doesn’t have a bank account or receipts for anything but was definitely earning over $20,000 per year. He was asked to do taxes by his immigration lawyer (he only has a ITIN since he was not eligible for a S.S) and apparently this will hold up his case. Any advice here would be appreciated
Is there a way to do this for state taxes, that is where I typically wind up owing? And if someone is being claimed as someone else as a dependent, is there a way to adjust for this? My kids are at the point they are working summer jobs, and my son will be transitioning into full time work soon.
Hi Going green mom :) Yes, each state that has state income taxes should have their own version of the W-4. I would ask your payroll person to see what form they recommend. It should also allow you to adjust dependents.
These things are the worst ever. They used to be so simple. Now its a guessing game.
100% agree it was confusing before but now it is even more confusing.
Yup this happened to me. Still own 12k 😢
SupportingYou
Thank you Gerald! Appreciate that very much.