California exemptions because withholding increased 10%

Jul 21, 2010 4 Replies

Continuing the thread from "Federal District Court Judge Tosses Key Parts of DoMA", CA increased withholding 10% because of the emergency. So we can claim more exemptions to negate the increase. Here is my formula:



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If you make between $3,862 and $83,334 a month, and are single or married and both of you work, which describes a lot of the people I know in the Bay Area, then:



Let N be the number of exemptions under the new rules. The tax withheld is:



T = (Wages - N*83 - 303)*0.10505 + 197.66 - N*8.98 = (W-303)*0.10505+197.66 - N*(83*0.10505+8.98)



Under the old rules, the the tax withheld is probably,



t = (Wages - N*83 - 303)*0.0955 + 197.66 - N*8.98 = (W-303)*0.0955+197.66 - n*(83*0.0955+8.98)



T = t (W-303)*0.10505+197.66 - N*(83*0.10505+8.98) = (W-303)*0.0955+197.66 - n*(83*0.0955+8.98) (W-303)*0.10505+197.66 - (W-303)*0.0955-197.66 + n*(83*0.0955+8.98) N*(83*0.10505+8.98) (W-303)*(0.10505-0.0955) + 197.66*(1-1) + n*(83*0.0955+8.98) N*(83*0.10505+8.98) (W-303)*(0.10505-0.0955) + n*(83*0.0955+8.98) = N*(83*0.10505+8.98) N = ((W-303)*(0.10505-0.0955) + n*(83*0.0955+8.98)) / (83*0.10505+8.98)



If you make W000 a month, and were claiming n=1 exemption, then



N = ((10000-303)*(0.10505-0.0955) + 1*(83*0.0955+8.98)) / (83*0.10505+8.98) = 6.187



Since we're in the middle of the year, you should maybe set N 6.187+5.187 = 11.374


We could also claim *fewer* withholding exemptions, and then add on a specific additional dollar amount per pay period, to get to the same place. I don't know if that makes the math any simpler.

-Mark Bole

Claiming fewer exemptions and adding a dollar amount both _increase_ the withholding. The goal is to _decrease_ it back to reality.

Seth

Did you mean claim infinity exemptions and specify a fixed dollar amount?

You and Seth are both right, I was thinking of the more common situation where someone wants to increase withholding, not decrease it.

-Mark Bole

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