Re: Tax withholding question
All we are looking to change is the federal income tax withholding. FICA, Medicare, State, County, none of that we are looking to change, just the federal withholding. What we are thinking is that if we can get the federal withholdings down to zero then by specifying a particular amount for additional withholdings is that we are able to exactly manage how much the federal income tax that comes out for the last 12 paychecks of the year.
We don't want to change the state because Indiana has some strange formula and we don't know if we have met our state or county income tax liability yet, so we want to leave the state as is. And I know we can't change the FICA or medicare, but tracking the last few paychecks, those seem to be very consistent so even though we can't change them to whatever we want, at least they are easy to budget.
I think that's what we are going to do. We want to have $25 in federal income tax withholding taken out each week. So I think we are going to change our federal exemptions to something really high, like 18 (which was suggested by the IRS withholdings calculator) so that the formula takes $0 out. Then we are going to put $25 in the additional withholdings column so that $25 is all that's taken out each week in federal income tax withholdings.
Like I said, we are already pretty sure that we have had enough withheld throughout the year to cover what we are pretty sure we will be liable for in federal income taxes. We will probably be getting a small refund. We just want to have a small amount taken out for this last quarter, just in case. I have been through the IRS withholdings calculator a few times, a few different ways, with a few different estimates on what our total income will be (with the new baby, and with losing DD1 on the child tax credit because she turns 17 in December) and everything is telling me that we have already met the tax liability, so I think we are good in regards to that. But, just in case, we just want a little bit more withheld.