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2019 Allowances

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  •  hightower 
    Participant
    Status: Physician
    Posts: 1226
    Joined: 12/07/2016

    Can anyone verify how many allowances to claim for 2019 if you’re married, filing jointly with one child?  I filled out a new W4 for a new employer and the worksheet told me 4, but I question if that’s too many?  I don’t want to be in a situation where they’re not withholding enough of course.  Thanks in advance

    #180129 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 6341
    Joined: 01/09/2016

    There is really no way to know as this system is best used for middle- to low-income earners and not for HIPs with more complex situations. It is a rather poor guesstimation system at best.

    Personally, I would not choose higher than 2 in your situation, then run a projection during the year, and adjust.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~ 270-247-0555
    https://fox-cpas.com/for-doctors-only/

    #180133 Reply
     jacoavlu 
    Moderator
    Status: Physician
    Posts: 1425
    Joined: 03/01/2018

    yeah what you really want to figure out is your safe harbor number, and a current year tax projection (income going up, down stable?), and target withholdings to that number

    The Finance Buff's solo 401k contribution spreadsheet: https://goo.gl/6cZKVA

    #180134 Reply
     hightower 
    Participant
    Status: Physician
    Posts: 1226
    Joined: 12/07/2016

    Hmm, okay, I’ll just have them change it to 2 and leave it at that for a few months and see if my withholdings are on track. I do expect our income to be a bit lower this year since my wife is on unpaid maternity leave for the next 9 months, but I haven’t calculated a tax projection based on what I think I’ll make.  I’m actually not sure what I’ll end up making this year because it varies so dramatically based on how many shifts I sign up for.  Why do taxes have to be so complicated?  Haha

    #180136 Reply
    Liked by Tim
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 6341
    Joined: 01/09/2016
    Why do taxes have to be so complicated?

    Click to expand…

    You know the answer to that, and it’s not so I can have a job. I would always prefer to overestimate a bit than underestimate, but that’s a personal preference. Owing taxes in April is like paying student loans – it feels like you’re throwing a chunk of money into a pit and getting nothing in return.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~ 270-247-0555
    https://fox-cpas.com/for-doctors-only/

    #180138 Reply
    Liked by hightower
     jacoavlu 
    Moderator
    Status: Physician
    Posts: 1425
    Joined: 03/01/2018

    Hmm, okay, I’ll just have them change it to 2 and leave it at that for a few months and see if my withholdings are on track. I do expect our income to be a bit lower this year since my wife is on unpaid maternity leave for the next 9 months, but I haven’t calculated a tax projection based on what I think I’ll make.  I’m actually not sure what I’ll end up making this year because it varies so dramatically based on how many shifts I sign up for.  Why do taxes have to be so complicated?  Haha

    Click to expand…

    determining your safe harbor amount (number to have withheld to avoid penalty) is rather simple once your 2018 return is done

    if you pay the safe harbor but your 2019 tax is less than 2018, well you’ll have a refund on your 2019 return

    so your goal should be to determine your safe harbor once 2018 return is complete, adjust 2019 withholdings to target that number, then ~ Sept try to run a 2019 projection, and adjust withholdings down if appropriate

    The Finance Buff's solo 401k contribution spreadsheet: https://goo.gl/6cZKVA

    #180140 Reply

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