Difference Between Withholding on 3 or 4 Dependents on 60k

Review your pay stub for the difference in your withholding.

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Every time you start working for a new employer, you make an important decision. The number of dependents you claim on your W-4 form can dramatically affect your tax results when you do your taxes in April. Too few dependents, and your employer may take out too much in taxes, leading to a higher refund but lower take-home pay. Too many dependents and you won’t pay enough throughout the year, which may mean an unpleasant surprise in the form of a tax bill. Fortunately, you can adjust your withholdings at any time during the year. If you make a $60,000 salary, it isn’t too late to think about making those adjustments for the current tax year. Understanding what you’ll pay in taxes can help with that.

Marital Status and Deductions

Multiple factors come into play when calculating how much in taxes you'll have to pay the government each year. One of those factors is your marital status, as well as whether you and your spouse file jointly or as a couple. As of 2018, individual taxpayers earning $60,000 pay $4,453.50 plus 22 percent of any amount over $42,400, which is $3,872. That would be $8,325.50 in taxes due for the 2018 tax year.

For a married couple filing jointly, however, that same $60,000 as a household income would generate a tax bill of $1,905 plus 12 percent of the amount that exceeds $30,600. That brings the total taxes due to $5,433. However, those numbers can be offset by any credits or deductions claimed on your tax return.

Withholding by Dependent Numbers

To ensure you arrive at the desired refund level at tax time, you’ll likely need to adjust any withholdings to align with tax changes from one year to the next. The W-4 form includes a Personal Allowances Worksheet to help you calculate how many you should claim. If you’re making $60,000, the worksheet directs you to enter “4” for each child. However, by entering “4,” you’re having less withheld from each paycheck, which could result in an unpleasant surprise in the form of a tax bill in April.

Still, having too much withheld and getting a big refund check means you just gave the IRS an interest-free loan. Either way, experts have urged taxpayers to do a W-4 checkup as soon as possible, especially if you’re in a dual-income household. The IRS provides a withholding calculator on its website to help with that.

Other Considerations

If you have dependents, there are other ways you’ll be able to save at tax time, making your withholdings more complicated. You may think you need to have $8,325.50 taken out of your pay without actually realizing the tax savings you’ll get for parental perks like the Child Tax Credit, which offers $2,000 per child. The phaseout for the Child Tax Credit has been increased to $400,000 of modified adjusted gross income for married filers and $200,000 for all others, so at $60,000, you’ll be able to comfortably take the credit.

If you live in a state with income tax, you’ll also need to factor the amount you’ll pay each year for that. If you’re lucky enough to get a raise or bonuses from one year to the next, you should also watch the tax tables carefully to make sure you shouldn’t adjust your dependents to so that you’re paying in enough throughout the year.

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About the Author

Stephanie Faris has written about finance for entrepreneurs and marketing firms since 2013. She spent nearly a year as a ghostwriter for a credit card processing service and has ghostwritten about finance for numerous marketing firms and entrepreneurs. Her work has appeared on The Motley Fool, MoneyGeek, Ecommerce Insiders, GoBankingRates, and ThriveBy30.

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