The Small Business Tax Help Blog

Archive for the ‘Tax Withholding’ Category

Immigration Reform Will Ease Economic Decline, Study Says

A new study contends that legalizing undocumented workers through comprehensive immigration reform would yield $1.5 trillion to the U.S. Gross Domestic Product (GDP) over a 10-year period, creating jobs and raising wages for all Americans. Traducción al español

2009: A Year in Review

•Katy police responded to a string of burglary of motor vehicle cases when at least 15 vehicles were broken into, most of which occurred in the 5300 block of Highway Boulevard.

1176-UCC #24-Winston Shrout audio-1099OID process: FORCLOSURE

Question: How much should be taken out of federal withholding?

okay, I’ll use real numbers. let’s say I make 10 dollars an hour and work 30 hours a week. I get my check bimonthly so it comes to 600 dollars. now, it shows $40 withheld. it seems to me, it should be more like 10% and that $60 should be taken out. is this correct? California state taxes and SDI is also taken out, but that shouldn’t effect federal. I just don’t want to end up owing.

any tax know-it-alls out there who can advise?

Answer: You don't need to be a tax know it all, go to the IRS circular E, determine how many exemptions you have and whether you file married or single and there you will see exactly what your Federal deduction should be. Good luck!

White House Changes Stimulus Jobs Count

ProPublica: Instead of Only Saved and Created Jobs, Will Count All Who Work on Projects Funded With Stimulus Money

Question: How is a defined contribution early withdrawl Tax Withholding calculated?

I know that first there’s a 10% penalty on the early distribution of a defined contribution account, but at the same time, how would the FIT and other taxes withholding be calculated for an early distribution? IE is it a flat percentage like supplemental income? Or is it annualized? Or is it by some other formula? Also, since FICA taxes are not exempt from withholding on defined contribution deductions, will FICA be taken out of the withdrawl again? Thanks!

Answer: Okay, it's flakey.

You paid the fica/mc when you made the money, so that is not an issue now.

When you take the money out, typically they withhold 20%. 10% for the penalty and 10% towards your tax bill. The problem is, you won't know your tax rate until you know your income for the entire year. Occasionally I encounter someone who was so broke, they didn't pay income tax and got a refund. Most of the time, I encounter people who are in the 15% and 25% tax brackets scrambling to come up with more money.

U.S. Attorney: Phony tax preparer filing false returns

Nashville woman pleads guilty to federal charges More

tax help: what is the trust fund penalty tax?

Question: Appropriate W-4 withholding for newly married couple? (US California)?

Hello – I recently got married (mid ‘05), but didn’t change my withholding until last year. We were originally worried that we’d get nailed with a hefty tax bill last year, as we were both withholding 2, single. Turns out we only owed $500 federal, and a small amount for state. So early in 2006, we both updated our W-4’s to married jointly. My wife was between jobs, and was making a career move – we saw that our total income was going to drop, and thought withholding 1 for both of us would be fine. Our 2006 total income (before adjustments) was about $15K less than 2005 – so I thought we might even get a refund.
We were right, for our state taxes at least – refund of +$400.
For federal, however, we owe $3100.
My mind boggles at the insanity of this. Is this the dreaded “marriage tax” in effect? How in the hell could this happen? I filed through H&R Block’s website – and I checked and rechecked my return before submitting – and so now I might even owe a penalty? What gives?!?

Answer: What gives is that the withholding rates for Married are based upon a SINGLE income for the family unit. If both of you work, especially if one of you makes substantially more than the other, you will wind up with exactly the situation that you are now in.

Prior to making the change you had it just about right. A $500 debt at tax time isn't enough to draw any penalties for underpayment and gives you the maximum use of your $$$ through the year.

To properly calculate your withholding exemptions, a dual-earner couple needs to sit down with a copy of the Form W-4 package (get a copy from the IRS website) and use the worksheets on page 2 to figure the correct exemption amounts and extra withholding amounts. The totals you come up with are the TOTAL number of exemptions that you can claim between you and the TOTAL additional withholdg amounts that need to be withheld.

If you had left your withholding exemptions alone and added a $10 "kicker" per week ($20 per pay period if paid bi-weekly) you probably would have worked out just about right at tax time this year even with your spouse's reduced income in 2006.

If you read Form W-4 completely, it's pretty clear that you need to use the worksheets on page 2 to arrive at the correct withholding amounts for your tax situation. We're nearly 1/3 of the way into tax year 2007 so you need to get on this quickly, and probably will need to designate additional withholding amounts to prevent another negative balance next year to make up for the under-withholding so far this year.

Goal is money shift, no tax hike

Tempers are short, coffers low and a partisan skirmish Thursday on the Assembly floor made the target clear: Take money from some to help others while avoiding the dreaded two-thirds vote requirement.

DRIVE 300 MILES PER GALLON!!!!