Jump to content
ATX Community

Recommended Posts

Your update will be out in 20 minutes....correct?   I feel for you on this one.   Everyone is waiting to see if it makes a difference.   I tried to calculate my withholding and I think it comes to about $15-20 per week less.

Tom
Modesto, CA

  • Like 2

Share this post


Link to post
Share on other sites

What's going to happen to those employees that claim infinity allowances but never file tax returns? 

  • Haha 2

Share this post


Link to post
Share on other sites

My update was posted a couple of minutes ago... Not my first rodeo :)

Other than testing the actual accuracy of my calculation against n1036, I did a test of a married 0, 1k week.  24 less FWH.

I was actually guessing today.  They post the file, if you know where to look, the day "before" the list of their current files gets updated.  Something like this, they seem to prefer Friday for wide knowledge, and with the Monday holiday, even better for them :)

Anyone that wants to play, can download and install our free trial and see the results.

  • Like 2

Share this post


Link to post
Share on other sites

I don't get it. They're pretending like we get a 4,150 personal exemption on our taxes, just as a way for people to have less withholding? Maybe I do get it, but it seems illogical.

I'd be much happier if they just let us enter a flat % that we wanted withheld. When clients call up they ask what % their withholding should be and I tell them. Then they ask how they go about achieving that, and I ask if they have a friend in their payroll department. If not, I send them to paycheckcity.com.

  • Like 3

Share this post


Link to post
Share on other sites

The reality is there are many other tax jurisdictions which use the federal "exemption" amount, and W4 information.  I have no idea why, but the IRS wisely decided to come up with calculations which did not require a new W4, and did not "break" the other jurisduiction's calculations.  Employers have no flat % options available, other than exceptions for bonus type payments.  Employees do not like use of the allowable flat % option, since it is at higher rate than a normal calculation.

There is absolutely no logic in withholding, other than to make sure it stays complicated, and for a politician to try to be able to say they increased net pay.

  • Like 2

Share this post


Link to post
Share on other sites

A employee picking a flat rate is not necessarily higher than using the tables. A table calc could give you 10% average rate and the employee could decide they really only want 8% withheld.

Share this post


Link to post
Share on other sites
7 minutes ago, Abby Normal said:

A employee picking a flat rate is not necessarily higher than using the tables. A table calc could give you 10% average rate and the employee could decide they really only want 8% withheld.

There is no option for the employer to calculate withhold a flat rate, or even select a flat rate =on a W4... Now, if the employer agrees, the employee can claim a high number of allowances (which in itself, can be troublesome because of the jurat on the W4) and withhold a certain "additional" dollar amount.  But either way, there is no allwalbe calculation of a flat percent an employer can use (refer to Pub 15), nor does the W4 allow an employee to request a flat %.

Share this post


Link to post
Share on other sites
2 minutes ago, Medlin Software said:

Single, got it, but how many allowances on the W4?

Zero for 2017, and I used the table for 2018

Share this post


Link to post
Share on other sites
6 minutes ago, Medlin Software said:

"Net Pay increase" not "tax savings".  Withholding may not reflect actual liability :)

That's correct.

Share this post


Link to post
Share on other sites
1 minute ago, Medlin Software said:

The 444 shows me you are using the MARRIED chart, not SINGLE.

Single 0, 2018, 2307.69 Biweekly is 320, difference of 71.

I did use the married table by mistake, but $71 is not bad either.

Share this post


Link to post
Share on other sites
2 hours ago, Abby Normal said:

I don't get it. They're pretending like we get a 4,150 personal exemption on our taxes, just as a way for people to have less withholding? Maybe I do get it, but it seems illogical.

I'd be much happier if they just let us enter a flat % that we wanted withheld. When clients call up they ask what % their withholding should be and I tell them. Then they ask how they go about achieving that, and I ask if they have a friend in their payroll department. If not, I send them to paycheckcity.com.

I think they're pretending that the Standard Deduction almost doubled and most people take the Standard Deduction.  And the people with dependents get $500 to $1,000 more in credits, in general.  Then figuring what the reduced tax amount would be on average.  That's what I think.

Honestly, I'd have to rip out my phone if all my clients needed to know what % to have withheld.  Then they'd be mad at me at filing time because they got small refunds.  Unless I want to have the whole conversation about how much do you want them to keep all year?  I'm good with leaving things alone right now as far as W-4s are concerned. 

  • Like 4

Share this post


Link to post
Share on other sites

For those friends who know me, and ask, I have suggested they wait until July to revisit their W4 information.  By then, they can extrapolate their income for the year, and what they have has withheld so far, and make any desired adjustments.  I hope not, but prepare for, the calculations to be on the light side, not the conservative side, since those with a R after their name, and likely many with a D after their name, will want to "bank" on their home voters believing they gave them a raise :).

  • Like 4

Share this post


Link to post
Share on other sites

Anyone ever notice that if you do the calculations on the current W4, the result is way more exemptions than anyone wants to claim?  My son had to fill one out recently and called me to ask why it told him to claim 3 exemptions (he's single, no exemptions except himself).  I've had a lot of clients who tried filling the form out themselves and called with the same question.  The IRS has a long history of trying to get people to break even, with their withholding roughly equal to their liability.  They seem to have given up because people love those big refunds and they can't convince them to change.  My guess is that the new tax tables approximate the breakeven scenario, just like the calcs on the current W4s.  With the old system taxpayers could manipulate their withholding by changing the number of exemptions, which is no longer an option. So in Illmas's scenario, the taxpayer might see $71 more each paycheck, but maybe $11 is his lower liability and $60 is from the $1600 refund he used to get--now being given to him in installments of $60 X 26 weeks.  2019 refund = $40.

  • Like 2

Share this post


Link to post
Share on other sites

Can an employee still request a flat dollar withholding in addition to whatever the table shows?  Seems like they could do so in the past without trying to navigate the W4.

Share this post


Link to post
Share on other sites
6 minutes ago, Randall said:

Can an employee still request a flat dollar withholding in addition to whatever the table shows?  Seems like they could do so in the past without trying to navigate the W4.

I am visualizing QB payroll, it doesn’t matter how many allowances the employee is claiming but one can manually adjust federal withholding to basically anything.  However I see this as a billable service to employees and not the employer, also I had clients in the past receive IRS notices to adjust their allowance, could this be a temporary end to that notice?

  • Like 1

Share this post


Link to post
Share on other sites

You still have to navigate the W4... unless you claim 19 allowances to have zero tax withheld and then put down additional amount desired.

Back in the day, the 0% bracket represented the standard deduction. Now, for a single, weekly employee, the 0% bracket is $71. Time 52 = 3,692. So if a person claims single 1, they exclude 3,692 + 4,150 for the allowance which totals 7,842, and not the 12,000 standard deduction they are entitled to. They would have to claim 2 to get to 11,992.

I would rather my low income clients be over withheld than under, and logically, the IRS would rather issue refunds than chase balances due.

 

  • Like 1

Share this post


Link to post
Share on other sites

An employee can ask anything, and they will.  Wise employers follow the law.  Employers have enough burden, they should do only what is required, nothing more, nothing less.

Employers use the most current valid W4 (other than exempt, they do not expire).  If valid, they MUST follow it.  Any strike through or alteration of the form makes it invalid. If no valid W4, then single zero allowances is required.

There is no option on a W4 for a flat percentage.  IRS Pub 15 offers no employer method for flat percentage (save for bonus type payments, which if used, will make the employee unhappy!).

As both Abby and I have posted, there is a way an employee can end up with a steady dollar amount per check, but not a flat percentage.

Employers may limit W4 "changes" to once in 30 days, as there are some employees who will play with their W4 fr budgeting purposes.

Employers no longer have to "report" W4 to IRS if more than a certain number f allowances are claimed.  Employers can report suspicious W4 forms, but I doubt many do.  The IRS can issue a Lock In order to an employer, forcing the use of a certain status and allowance.  The employee has a certain time to appeal such orders.

If an employer does not follow the W4 as well as use an approved withholding calculation method, the employer (and likely the person preparing the payroll) can be included int he collection "chain" if the employee fails to pay their liabilities.

  • Thanks 1

Share this post


Link to post
Share on other sites

The IRS sent a letter to my ex's employer instructing them to increase withholdings because she kept owing every year and had an ever increasing installment agreement. I LOL'd.

Share this post


Link to post
Share on other sites

I received a lock in letter personally, several years back.  At that time, my liability washed to zero, even with a reasonable income (one earner family, loads of mortgage, tax, and other deductions, fair amount of properly accounted for non taxable "income").  The lock was sent the first year of the lock letters, and was likely automatic for anyone who was above a certain earning level, with no withholding balance for Q1 (IIRC, and I probably do not).  It took only a short time to clear up, once I got someone on the phone to look at my prior returns and see I had no liability and no back debt.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

  • Recently Browsing   0 members

    No registered users viewing this page.

×