Tax question (1 Viewer)

Goatman Saint

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Just curious here for those that know more than I. My wife had two jobs last year, with a July switch. She made roughly 60k at each. My question is with tax rates. For each job for they work up through the tax rates, first portion not taxed, then next part at next rate and so forth or does it just even out like she made 120k at the end? We owe about 1500, and before I go in and take additional out of my check, I was just wondering if a full year at the same employer would increase the amount taken out in taxes so I don’t have to do this. Or should I? My knowledge of inner tax workings is pretty low.
 

superchuck500

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Tax owed is based on the income in the calendar year. But I think you're asking about the withholdings, and I really don't know much about that. I would imagine if the periodic wage was similar for both jobs and both were in the same state and she filled out her forms the same way, withholding would be similar.

But you should be able to look at the two W-2s and get the total income minus th standard deduction (presuming you're using it) apply your joint rate and then see how it compares to the withheld total.
 

Saint_Ward

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Just curious here for those that know more than I. My wife had two jobs last year, with a July switch. She made roughly 60k at each. My question is with tax rates. For each job for they work up through the tax rates, first portion not taxed, then next part at next rate and so forth or does it just even out like she made 120k at the end? We owe about 1500, and before I go in and take additional out of my check, I was just wondering if a full year at the same employer would increase the amount taken out in taxes so I don’t have to do this. Or should I? My knowledge of inner tax workings is pretty low.
So, if she didn't change jobs, she'd have still made 120k that year?

If so, her witholdings from her employer would have been the same, outside of any W4 changes made.. i.e. claiming 0, claiming 1, etc. They withhold taxes based on what they assume will be the end of year amount.

Think about it, your pay check is steady, if salary. It's not like they ramp up taxes as the year goes on.

So.. no. A full year wouldn't have changed anything.
 

Saint_Ward

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Now, it does depend on how much you make as well. For example, my wife is a social worker (translation, paid like sheet). So, she barely has any taxes taken out. My pay covers most of our tax burden. However, with the kids (one in college) we still score the big tax credits.

But, in reality, it all matters how you fill out your W4, any tax savings, like 401k, HSA, IRA, etc, and what your family situation is (kids, college, child care).
 

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You are taxed on what your total estimated salary would be for the year. So, if her yearly salary for her first job was less than $120K, let's say $100K, and then she moved to a job with a higher pay of $120K, you could potentially have a tax shortfall for the year that you would not have next year. If both jobs were taxing her at the $120K a year rate, then you can expect the same tax deficit next year as you had this year. I hope that makes sense. Basically it depends on if she moved to a higher paying job or if she just made a lateral move.
 
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Cool thanks. That’s what I thought, but wasn’t sure. Since this year was new with losing our daughter and now both of us at the top of our pay schedules, I now now where things are at going forward.
 

buzd

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Cool thanks. That’s what I thought, but wasn’t sure. Since this year was new with losing our daughter and now both of us at the top of our pay schedules, I now now where things are at going forward.
It’s going to depend how she filled out her W4 at her new job. If she treated it as her only employment of the year, y’all could be owing a chunk. But as noted, there are several variables in play - including your income, how you file, etc.
 
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She goes single zero at both of them. We have went from kids in college to double income no kids and a house with basically nothing for interest. Just trying to figure out what Additional time have withheld so that I don’t have to cut a big check to Uncle Sam.
 

buzd

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She goes single zero at both of them. We have went from kids in college to double income no kids and a house with basically nothing for interest. Just trying to figure out what Additional time have withheld so that I don’t have to cut a big check to Uncle Sam.
The new W4s are different and have several more calculations. It’s not just number of exemptions.
 
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Not a tax guy...so completely consider this as bad information and not trustworthy. :)

I think that there are generally three buckets: 1) single, 2) married and spouse works, 3) married. They take out more tax from your paycheck for single, then married and spouse works, then the least for married.

Then you can claim withholding associated with each...and the larger the number of withholding the less they take out each year of your taxes.

So if you owe and you are both claiming 0 and married...you may need to select "married and spouse works". If you still owe...then you will need to claim 0 withholdings and single (or at one of the two of you will).

FYI...I believe that there is a tax deduction for switching jobs...so be aware that you may actually owe MORE next year. That got me this year.
 

buzd

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Then you can claim withholding associated with each...and the larger the number of withholding the less they take out each year of your taxes.

So if you owe and you are both claiming 0 and married...you may need to select "married and spouse works". If you still owe...then you will need to claim 0 withholdings and single (or at one of the two of you will).
Not to repeat myself, but I'm going to repeat myself. The w-4s have been updated to take that sort of thing into account (including multiple jobs) and it should give you more granular control over how your taxes are calculated. It's no longer just a question of number of exemptions. Note that if you have been at a job for a while (since pre-2020), you can submit the updated w-4 to have your tax withholding adjusted.

For reference, here is the new w-4. https://www.irs.gov/pub/irs-pdf/fw4.pdf
 

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