It’s open enrollment season again, which means it’s time to decide on your benefits and spending account contributions. PayCheckCity has a variety of tools for simulating what your take-home pay would be if you added disability insurance, increased your FSA amount, and so on.
It can also be a good time to check your paystubs and see if you want to make any other changes. Maybe you want to increase your cashflow, or see if you can afford to put more away in your 401k. You can also check if you’ve already paid as much taxes so far this year as you did last year. If so, you could underwithold taxes on purpose and stick the difference in an interest-bearing account to make a few extra bucks. You can then wait until April 15th to pay up what you owe without penalty. Uncle Sam makes millions every year on people who overwithold their taxes – why not flip the tables? Hint: If you want to stop withholding as much, you can put up to 10 allowances on your W-4 without IRS notification. You can put as many allowances as you want, but I wouldn’t go totally nuts.
Thanks to Mapgirl’s Fiscal Challenge for the PayCheckCity link.
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I think there is a better calculator at http://www.dinkytown.com. The site also has a host of personal finance calculators.
FYI: The IRS did away with the allowance notification procedure. If it’s over 10, it’s no longer automatically reported to the service.
Thanks for the linky Jonathan! Did you ever see my post about Treasuries? I was wondering if you’d ever double check my math & logic. I’ll dig it up and email the link to you.
Dinkytown is a great site too, I’ve blogged about them before. Their payroll calculator doesn’t automatically look up your state tax rates for you, though.
I thought that you could not claim as many exemptions as you want because if you end up with a big tax bill for the a year, wont uncle sam will ask you to set up an estimated tax payment schedule the following year?
I found my answer with your older post. As long as you pay the 100% of taxes paid the previous year they cant penalize you.
Companies no longer have to report to the IRS when employees claim more than 10 exemptions:
“If an employee claims more than 10 exemptions on their Form W-4, does the employer have to report this to the IRS?
No, this requirement has been eliminated. In the past, employers had to routinely send the IRS any Form W-4 (PDF), Employee’s Withholding Allowance Certificate, claiming more than 10 allowances or claiming complete exemption from withholding if $200 or more in weekly wages was expected. However, Forms W-4 are still subject to review. Employers may be directed (in a written notice or in future published guidance) to send certain Forms W-4 to the IRS. The IRS also will be reviewing employee withholding compliance and you may be required to withhold income tax at a higher rate if notified to do so by the IRS. ”
http://www.irs.gov/faqs/faq-kw205.html
Thanks for the updated correction. 99 exemptions here I come! 😉
I love Paycheck City. I am responsible for processing payroll for a small business and this site makes my work so much easier considering that I do everything else pretty much by hand. I find that even with using their site, the best way to get a real picture of what you will owe in April is to go ahead and fill out your 1040 and your state tax form and see what you’re going to owe and compare that to what you’re on track to pay. Personally, I try to set up my paychecks so that I neither owe nor receive a refund.
i am starting a new job in cumming ga i will gross $340.00 i need to kn ow what my withholding will be so i can decide how to manage my money . i claimed one dependent and heas of household.