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Getting married and both working, how should we update our W4′s for the current tax year?
I’m getting marriend at the end of this month. I’ve done research, but haven’t been able to find a clear cut answer on when we should adjust our W4′s and what adjustments we should make. I tried going through the IRS calculator, but I wasn’t sure I was getting the correct information in.
We both work and both make approx $55k a year, in addition we both own houses (mine will be rented) and both have student loan debt and neither of us have kids. We want to minimize the amount of taxes we have withheld without incurring underpayment penalties and having a tax bill at the end of the year.
Thanks!
Very, very carefully.
1. Get blank copies of 2008 forms.
2. Use them to draft a tax return with the income you THINK you will have in 2009. (If you have software on your PC, run a return–that will pick up the intricacies of the rental property and if amt is an issue will automatically generate a form). Use 1040ES to look up 2009 numbers for brackets, etc. Also look at pub 505 to look up 2009 rules.
3. Then, having figured out roughly the withholding you’ll need, figure out the part you want covered from your paycheck, her paycheck or from estimated tax payments (optional). Divide by number of pay periods and then use www.paycheckcity.com to guestimate how many allowances that is–or use current allowances and add fixed amount on the W-4 to pull out extra amount.
4. Rerun numbers in June and September, adjust W-4 accordingly.
