Filing new W4 as a married woman

[sarakosova 0]

I just got married at the end of January and believe I am supposed to file a new W4 with work. Correct? As my husband currently can not work, I was going to claim 2 exemptions. However, hopefully in a few months, he will be working. Will I need to fill out another W4 once he starts working to give to my employer? I just don't want to get in trouble with the IRS!

Also, can someone explain to me in laymans terms what the "marriage tax" refers to? I understand it isn't really a tax, but just a higher tax rate you pay once married. Doesn't that seem counteractive, almost like punishing people for getting married?

Thanks for any help or advice! Best, Sara

[diadromous mermaid 36]

I just got married at the end of January and believe I am supposed to file a new W4 with work. Correct? As my husband currently can not work, I was going to claim 2 exemptions. However, hopefully in a few months, he will be working. Will I need to fill out another W4 once he starts working to give to my employer? I just don't want to get in trouble with the IRS!

Also, can someone explain to me in laymans terms what the "marriage tax" refers to? I understand it isn't really a tax, but just a higher tax rate you pay once married. Doesn't that seem counteractive, almost like punishing people for getting married?

Thanks for any help or advice! Best, Sara

Form W-4 is used so that the employer can withhold the appropriate federal income tax from your paycheck. In the event that not enough federal tax is withheld, at tax filing time you and your spouse might have to pay tax with your return. Many people follow the worksheet on the W-4 to figure out the correct number of exemptions to be sure, but there are also many that purposefully manipulate those declarations to either have more tax withheld or less tax withheld, per their own needs. Since IRS does not pay interest, some feel it makes little economic sense to pay more than necessary throughout the year. I'm one!

Edited February 3, 2006 by diadromous mermaid

[Yodrak 7]

Sara,

Only if you want to. diadromous mermaid gave you some things to consider in making your decision.

Yodrak

I just got married at the end of January and believe I am supposed to file a new W4 with work. Correct? ...

Thanks for any help or advice! Best, Sara

[w¡n9Nµ7 §£@¥€r 123]

Since IRS does not pay interest, some feel it makes little economic sense to pay more than necessary throughout the year. I'm one!

IIRC, the IRS does levy fines if it believes a taxpayer is purposely withholding too little tax.

I found this on Yahoo Taxes

Underwithholding costs: If you haven't paid your taxes or paid too little during the year, the IRS will charge interest on the money it decides you should have sent in earlier. The interest is compounded daily and begins on the day the taxes were due and continues until the agency gets the money. The interest rate is variable, based on the federal short-term rate plus 3 percent, and is recalculated every three months.

In addition to the interest charged on unpaid taxes, the IRS also can hit you with a penalty if it decides you were really bad. There is a late payment charge of 0.5 percent of the tax owned for each month -- or any part of it -- that your tax is unpaid after its due date. This penalty can increase up to 25 percent and can increase in 1 percent increments if you don't pay after getting several notices from the IRS.

There is a $500 civil penalty for underpayment of withholding if you claim W-4 allowances you knew you weren't entitled to and those allowances reduced the tax taken out of your pay.

And you could face criminal charges if you enter false W-4 information. This charge also applies if you fail to change your W-4 when necessary to appropriately increase your withholding. If convicted, you could be fined as much as $1,000, be jailed for up to one year, or both.

These penalties apply to intentional falsification of a W-4 in an attempt to reduce or eliminate withholding taxes. If you make a simple error -- an honest mistake – you won't face prosecution. For example, a person who has tried to figure the number of withholding allowances correctly, but claims seven when the proper number is six, will not be charged.

http://taxes.yahoo.com/basics/withhold/under.html

Edited February 3, 2006 by Agent Smith

[dcl766 0]

Be very careful when switching from single to married on the W4 when deciding number of exemptions. When I was single I was getting back $3-4k per year which actually acted as a "forced" savings plan for me and worked out good. Then I got married and changed the W4 to married and kept 1 exemption, which is fine, but what got us this year was that my wife had 2 part-time jobs and a small business on the side and she was paying hardly any federal taxes by claiming 1 exemption on the W4 for both jobs. Per the insturctions which I didn't read closely enough, she should have been claiming zero on one of them to pay more taxes during the year.

This year we are only getting back like $300 which isn't much of a savings plan and a big pain in the you know what when you were expecting like $3,000!!

We live and learn...

Dave

[zyggy 9]

There's a better way to get forced savings that having the government do it for you. Just get an ING Orange Account. There they can take out so much per paycheck and you'll actually get some interest on it...

[diadromous mermaid 36]

Since IRS does not pay interest, some feel it makes little economic sense to pay more than necessary throughout the year. I'm one!

IIRC, the IRS does levy fines if it believes a taxpayer is purposely withholding too little tax.

I found this on Yahoo Taxes

Underwithholding costs: If you haven't paid your taxes or paid too little during the year, the IRS will charge interest on the money it decides you should have sent in earlier. The interest is compounded daily and begins on the day the taxes were due and continues until the agency gets the money. The interest rate is variable, based on the federal short-term rate plus 3 percent, and is recalculated every three months.

In addition to the interest charged on unpaid taxes, the IRS also can hit you with a penalty if it decides you were really bad. There is a late payment charge of 0.5 percent of the tax owned for each month -- or any part of it -- that your tax is unpaid after its due date. This penalty can increase up to 25 percent and can increase in 1 percent increments if you don't pay after getting several notices from the IRS.

There is a $500 civil penalty for underpayment of withholding if you claim W-4 allowances you knew you weren't entitled to and those allowances reduced the tax taken out of your pay.

And you could face criminal charges if you enter false W-4 information. This charge also applies if you fail to change your W-4 when necessary to appropriately increase your withholding. If convicted, you could be fined as much as $1,000, be jailed for up to one year, or both.

These penalties apply to intentional falsification of a W-4 in an attempt to reduce or eliminate withholding taxes. If you make a simple error -- an honest mistake – you won't face prosecution. For example, a person who has tried to figure the number of withholding allowances correctly, but claims seven when the proper number is six, will not be charged.

http://taxes.yahoo.com/basics/withhold/under.html

Agent Smith are you an IRS agent?

Yes, of course IRS will penalise a taxpayer if he/she is not paying adequately. What I was suggesting is why pay in so much that at the end of the year you receive a sizeable refund? IRS will not invest that money for you and return a dividend. It's better to carefully check to see what your estimated tax burden will be and pay throughout the year accordingly. For example, say one is earning $55,000 and let's say that the tax table suggests that the Federal WT should be $15,000 per year (I haven't looked at that rate, BTW) and employer is withholding $15,000 (you can compute this from one paycheck) bearing in mind the standard personal deduction a taxpayer would be due several thousand dollars at the end of the year. Why leave it in the hands of the IRS. Why not place it in some sort of interest bearing account instead?

[w¡n9Nµ7 §£@¥€r 123]

Why leave it in the hands of the IRS. Why not place it in some sort of interest bearing account instead?

I don't disagree with you at all. I was just pointing out that someone who isn't aware of the penalties of underwithholding may interpret your advice the wrong way. So I threw that in there for balance.

[diadromous mermaid 36]

Why leave it in the hands of the IRS. Why not place it in some sort of interest bearing account instead?

I don't disagree with you at all. I was just pointing out that someone who isn't aware of the penalties of underwithholding may interpret your advice the wrong way. So I threw that in there for balance.

Oh, ok.