A few people at work have suggested to me that I change my W4 information for my upcomming large commision checks. I have 2 planned for the 20th Oct and 5th Nov. Normal tax on my salary checks are about 23% but the upcoming checks will be for about 7k each and Im afraid Im going to pay out the @ss in taxes.
What should I say on my W4 that would help me avoid losing most my check, but still wont ding me to bad at the end of the year???
thanks guys!
2006-10-05 06:43:46 · 6 answers · asked by Annie P 1 in Business & Finance ➔ Taxes ➔ United States
It all works out the same in the end. In my experience, the people who try to play games with their W4 usually end up owing (sometimes big) at the end of the year. I would just leave it alone.
2006-10-05 06:50:14 · answer #1 · answered by Wayne Z 7 · 3⤊ 0⤋
I don't know how you claim yourself, single or marry along with the number of dependents, however, it is easier to take the hit now and not at the end of the year. I had been in sales for too many years and once I place all my deductions and expenses, the percentage of my return is at least 4 -10% of what I was supposed to if I go in a different route. There is a federal guideline that holds commission checks to no more than 30 % and being that you are getting hit at 23 % you should not be hit anything harder. Now if you are getting a 23% it means that you are in the high salary bracket and for that you got to look more into your expenses and deductions... The best person that can give you a more acquarate answer and can get your finance in order is a tax accountant whom will make sure you get more for your money... Remember that every person is a different case...
2006-10-05 13:56:02 · answer #2 · answered by SemperLeader 2 · 0⤊ 0⤋
Wayne Z is right. Don't fool with it. OK, so a high percentage of your check is withheld and given to the IRS on your behalf to cover your tax liability...you get back anything you overwithold in April anyway. If you knew exactly what you were doing, you could temporarily change it for the bonus check and then change it back...but for what? So, you get the money a few months early. Bottom line is, if you know what you are doing, great...otherwise you could end up owing a lot in taxes and possibly penalities. Be glad you are getting the bonus and leave it at that. Remember, no matter what you put on your W-4, it does NOT change your tax liability when you file your taxes...it only changes how much is withheld.
Enjoy your bonus!
2006-10-05 14:09:47 · answer #3 · answered by TaxMan 5 · 1⤊ 0⤋
You don't "lose" anything. They may withhold more because of the size of the check (it's based on percentage), but in the end you will settle your taxes based on the amount you made and you will owe what you owe and hopefully you'll be getting a nice big check instead of writing one.
If you're not very good at saving money, leaving your W-4 as-is is the best forced savings account you'll ever have. You might not like it if you are a good saver and have an account it would sit in and earn high interest. But it still won't be anything remotely significant since we're already in October.
2006-10-05 17:41:37 · answer #4 · answered by misslabeled 7 · 0⤊ 1⤋
What you put on your W-4 has ZERO effect on what the government keeps in the end. It only effects WHEN you pay. If you insist on playing with your W-4, the IRS provides a withholding calculator.
2006-10-05 19:18:22 · answer #5 · answered by STEVEN F 7 · 0⤊ 0⤋
Yahoo tax center has a W-4 calculator at this link.
http://turbotax.intuit.com/taxcenter/yahoo/w4analyzer.jhtml
2006-10-05 14:00:17 · answer #6 · answered by spicertax 5 · 0⤊ 1⤋