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Withholding Calculations

August 28th, 2015 at 07:25 am

I now have more information about the costs of tuition this semester, what can be claimed for the American Opportunity tax credit and how it will impact our taxes owed. And the good news is we will owe less in taxes as a result!

The bad news(good news?) is we have already had too much tax withheld to cover our taxes. A whopping $1775. Yes, most people rejoice at such things praising the government for providing them a tax refund. Unfortunately, I blame myself. I actually increased our tax withholding to compensate for the fact that we would no longer be able to claim the child tax credit (of $1000) for our oldest daughter and my husbands increase in pay. I didn't take the time to figure out about the college credits available and how that would impact our taxes. Oops!

The good news is I have changed our withholding to 10 for the time being. In order to avoid any more withholding we need to claim 18! My husband will need to do this in person, as I can't change the amount higher than 10 online. Once it is changed to 18 his monthly paychecks will be $518 larger! Money that I plan to set aside for the tuition bill in February.

Of course, I will need to change the withholding in January to make sure we do have money withheld in 2016! I haven't figured the correct amount to withhold right now, but trust me I will do a better job this year in getting it right. I will have more clear information this time around. Smile

Do you know where you stand on your withholding and taxes owed for 2015? Is it possible you need to make changes due to a change in circumstances? Do you prefer a refund or just to owe a little on your tax return?

4 Responses to “Withholding Calculations”

  1. Another Reader Says:

    My choice would be to send Uncle Sam a check for $10.00. Never happens. Too many things in play that change over the year to get it right.

  2. creditcardfree Says:

    I agree AR, $10 check to IRS sounds like the perfect scenario! And yes, so many things change to ever get it just right. Smile

  3. rob62521 Says:

    I will face making changes after I retire. I dread that part of it -- having to figure out how much to with hold.

  4. FrugalTexan75 Says:

    I'm not really sure where I stand with taxes. I had two raises this year (merit raise and cost of living - total of 5%) and I also started having 9% withheld for retirement. I got a decent refund last year with a witholding of 2, so this year put it to a 3 (to account for the 9% salary reduction + 2.25% for 6 months, and =5% total for 4 months of the year.) I'll see in January whether or not I got it right or not. Smile (My part time job I have a witholding of 0. Of course I've made all of about $200 from that so far ...)

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