My wife works for a small locally owned store that uses Quickbooks. When I got her W-2 this year, I saw that of her $6,000 salary, only $120 had been taken out for her federal taxes. Since we're filing jointly, that was over $1,000 not taken out. Is there a way in Quickbooks to set the federal tax to a specified rate ... say 18%?
Sorry. No. It sounds like her withholding allowances was too high. Go to paycheckcity.com and fool around with the payroll calculator to see what a more appropriate # of withholdings are.
I had the same thing happen to me. I had married-2 and they took out a minute amount of taxes. Married-1 or Married-0 gives me a better amount of taxes taken out.
This is good information. However, even Married-0 resulted in $0 tax using the above-mentioned calculator. Single-0 actually gives about $12 a paycheck. So it looks like we'll just have to specify a fixed amount per paycheck and see what comes out in the wash. It is a shame that the W-4 doesn't allow for a percentage for additional taxes.
For a $6000 annual salary no federal tax is correct. Where do you get the $1000 expected tax? Or do you have other unearned income (investments) that require that you have extra FIT taken out to cover that?
Laura wrote: ...
It's his wife's salary which added to his when they file joint return most likely...
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I would not expect that an additional $6000 in salary would require an additional $1000 withholding. Something else is going on.
You are just not in those tax brackets! At the max 35% tax rate another $6000 would be $2100 in tax!
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Yes, 1K/6K is a marginal rate of 16.7% which would probably be about right...
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O.B. wrote: ...
I've never used the payroll portion of QB so can't help there, but as you're looking at it, if you can roughly estimate next year's income based on current year, look at the marginal rate and split that up if it is necessary to withold the extra as fixed amounts -- or, of course, simply realize she is being under-witheld and and put it away.
You should probably pay estimated taxes and let your wife take home some semblance of a paycheck.
Haskel LaPort wrote: ...
I was just coming back to suggest as an addendum if followed the advice to not worry about the deduction that paying estimated's might be a wise idea to avoid underpayment penalty/interest...
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It always cracks me up when an employee whines that no taxes have been withheld. The answer is always the same; they either claimed double digit exemptions or claimed exempt.
It appears to me that it is Mr O.B. who is not having enough withheld. Completing the W4 work sheet should approach a correct solution. You could also specify a dollar amount on a W4 to be withheld from Mrs O.B.'s check. Macy
The basic IRS withholding tables are based on the assumption that the paycheck is the employee's sole source of income. Obviously the true tax bracket could be much higher based on several possible factors:
To minimize the need for the employee having to make quarterly estimated tax payments, line 6 of the W-4 form, which the employee uses to inform the employer of his/her withholding situation states "Additional amount , if any,you want withheld from each paycheck."
When you set up an employee in the payroll module, look at the screen into which you enter the employee's marital status and withholding allowances. There's another box which is labeled (in QB 2008 Pro) as "Extra Withholding". So you can't specify a rate, but you can boost the withholding this way.
Case closed?
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