Any Way to Cut Down on My Paycheck Deductions? (payments, degree, employer)

[Forever Blue]

Thanks for those who gave HELPFUL input. It's just frustrating. It's a sad day when someone working on a 2nd Masters degree can barely afford a nice apt in a nice city! But then I'm also single so it's not like I have a spouse's salary to help. (I happened to get a previous MA in special ed, (although I don't really need it for what I'm doing now, but I think everything helps & no education is a waste.)

And yes, those are union dues that's taken out every month for the $100. It's a teachers' association type of thing (even though I'm not technically a teacher.)

There is 1 hope: I currently work 4 days a week. If I bump it up to the full 5 days, my yearly salary will be in the $50Ks. But, since I'm in grad school in a very rigorous program until 2014, I plan to keep working 4 days/wk...at least until I graduate.

Hey, maybe when I fully learn all my stuff, I'll have my own practice or so something else in addition to working at the school district. I'm not a teacher, but getting a salary as if I'm a 2nd yr teacher. Apparently something else will need to be done. I wish these districts will pay what someone in my position deserves because my position requires a higher degree than most teachers...not to sound all high & mighty because I used to be a special ed teacher for a short time myself.

manderly6, who's complaining? I simply asked if anyone knows if any paycheck deductions can be cut somehow. Who knows, maybe someone out there has tips or something. Just because I don't want a roommate, that's not complaining. A lot of people out there do certain things that they choose to do.

Any other HELPFUL comments will be appreciated!

[mortimer]

Originally Posted by Forever Blue

Any other HELPFUL comments will be appreciated!

Here is my suggestion:

Learn how to calculate your estimated tax liability using a spreadsheet and update
the spreadsheet every month. The recommendations above for a certain number of W-4
exemptions are not worth anything. Your tax situation is your tax situation and their's is their's.

You can take 8 exemptions on your W-4 if you want to and after 3-4 months,
if it looks like you are going to be short on Dec 31st, you can adjust it from there.
As a W-2 employee, you can always catch-up before the end of the year.

If you find that with 8 exemptions that you have a whole lot more
take-home pay, then don't go out and spend it and "expand" your
lifestyle until you get your deductions lined-up with your tax liability.

If you can drive a spreadsheet, take a 1040 form and fill in everything that applies to you.
As a student, this should take all of 10 cells. You can find the current tax rates on the internet.

If you need more information, post again and I'll outline what the spreadsheet should look like.
If you can't drive a spreadsheet, find someone who can and buy them pizza.

If you want, I can email you a spreadsheet with cells filled in. This isn't a big deal, trust me.
If there are enough requests, and I feel magnanimous this weekend, I'll post a spreadsheet.

Addendum:
W-2 is the form you get at the end of the year you use to file your taxes.
W-4 is the form you use to tell your employer how much tax you want withheld from your pay.

[Thursday007]

Take your paycheck and divide it by 4.33 and your rent shouldn't be any higher than that if you want all the perks. It's just a rule of thumb your rent =one week of your pay.

[destinedtodave]

Originally Posted by mortimer

Here is my suggestion:

Learn how to calculate your estimated tax liability using a spreadsheet and update
the spreadsheet every month. The recommendations above for a certain number of W-4
exemptions are not worth anything. Your tax situation is your tax situation and their's is their's.

You can take 8 exemptions on your W-4 if you want to and after 3-4 months,
if it looks like you are going to be short on Dec 31st, you can adjust it from there.
As a W-2 employee, you can always catch-up before the end of the year.

If you find that with 8 exemptions that you have a whole lot more
take-home pay, then don't go out and spend it and "expand" your
lifestyle until you get your deductions lined-up with your tax liability.

If you can drive a spreadsheet, take a 1040 form and fill in everything that applies to you.
As a student, this should take all of 10 cells. You can find the current tax rates on the internet.

If you need more information, post again and I'll outline what the spreadsheet should look like.
If you can't drive a spreadsheet, find someone who can and buy them pizza.

If you want, I can email you a spreadsheet with cells filled in. This isn't a big deal, trust me.
If there are enough requests, and I feel magnanimous this weekend, I'll post a spreadsheet.

Addendum:
W-2 is the form you get at the end of the year you use to file your taxes.
W-4 is the form you use to tell your employer how much tax you want withheld from your pay.

Does your spreadsheet allow for comparison of exemptions? I've built a budget forecast for myself, but I have to admit I was unclear what tax returns to model in (I just used a reasonable estimate). Tax year 2011 should be easy for me though since I only started working in December, but I'd like to make it flexible enough to allow exemption inputs.

[wheelsup]

California Salary Paycheck Calculator | Payroll Calculator | Paycheck City

$3200 in CA is around $2500 after tax then take out deductions

You are single you need to put 1 on the W2. You take the standard deduction + 1 exemption, that is what that number is. Anything more than 1 and you will probably pay taxes at the end of the year unless you itemize, which I doubt you will be able to do.

$3,200.00 Monthly Gross Pay
$369.38 Federal Withholding
$134.40 Social Security
$46.40 Medicare
$101.77 California
$32.00 SDI
---------------------
$2500 +/- before deductions

21%+ in taxes before you even pay for health care/union dues...crazy...

Keep in mind the union most likely negotiated your pay scale. Without that you might be making way less money. So union dues are relevant.

[mortimer]

First, I need to explain the difference between the 'W' forms ... again ... < sigh >.
_______ The W-2 is prepared by your employer and given to you. _______
_______ The W-4 is prepared by you and given to your employer. _______

Next, any advice to "put 1 on the W2" ( should be W-4 ) is bad advice. Everyone's situation is different
and advice to put a certain number without knowing your situation is BAD ADVICE - every time. Stop it!

Originally Posted by decafdave

Does your spreadsheet allow for comparison of exemptions? ... I'd like to make it flexible enough to allow exemption inputs.

I don't understand the question. You don't get "inputs" you get get to take an exemption for each person in your family.
If what I put below doesn't clarify things, you might want to re-word the question.
( I like the Hangul, BTW. I'm a Kanji/katakana/hiragana-guy myself. )

Here is what you do. It is a two-step process ( using 2010 numbers ).

(1) Estimate your income.

Your gross pay is $1,000/paycheck. You get 26 paychecks, you make $26,000.
If you are getting withheld $100 each pay, then at the end of the year, you
will have $ 2,600 withheld for federal taxes. Is that enough? See step (2).

All it takes to estimate pay is 26 rows on your spreadsheet.

(2) Estimate your taxes. Use the 1040 form and put in the lines that apply to you.

Line 7 ... Wages ............................... 26,000
Line 8 ... Interest ................................. 100
Line 37 .. Adjusted Gross Income ......... 26,100

Line 40 .. Standard Deduction ............... 5,800 ( or itemized deductions )
Line 41 .. Personal Exemption(s) ............ 3,650
Line 43 .. Taxable Income ................... 16,650

Next, find the tax schedule and calculate your tax that you will owe:

•10% on income between $0 and $8,375 ........................... 838
•15% on the income between $8,375 and $34,000; .......... 1,241
•25% on higher amounts .... and so on ...
.................................................. .... Total tax owed is $ 2,079.

Based on these calculations, you will be getting a refund of $ 2,600 less $ 2,079 equals $ 521
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Jacking with the W-4 form:

If you put more exemptions on the form, your withholdings will go down.
If you are being withheld too much, then you need to put more exemptions.
Don't bother filling out the worthless worksheet on the back.

Example 1 - People who just started a job in September might be able to take 5 or 6 exemptions since their
Line 43 .. Taxable Income won't be as high as the withholding tables that your employer uses indicates that it will be.

That is, you might have a salary of $60k, but if you start on Sept 1st, you will only make $20k.
There is no sense being taxed at the $60k rate ( $8,819 ) when you will only owe $1,164.

Example 2 - A person might also have a mortgage where they pay $20k in interest and taxes.
If that person itemizes ( using Schedule A ), then they will also be able to deduct state
withholding taxes and such. Again, they might need to use 7 or 8 exemptions on their W-4 form.

Finally, you can't know exactly how many exemptions you need to take on the W-4 without knowing the tax tables.
If you have too much withheld and you modify your W-4 then the next time you get paid, you can see the effect.
If it's still not enough, take more exemptions by giving your employer yet another W-4 form.
( Your employer could figure it out for you, but it is easier to just take a shot and modify later. )
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If you are hourly and have varying amounts of gross pay then you will have to make as good of an
estimate that you can, over the rest of the year, what your hours and pay will be. In Mar/Apr, you
might not be able to guess very well. By Oct/Nov, you can come pretty close. A good strategy is
to have too much withheld and increase your exemptions in Sep and later in Oct/Nov so that you
have much larger net paychecks later in the year - rather than wait for your IRS refund.

On the subject of state taxes, the spreadsheet is done the same way - using your state's tax
form and using your state's tax schedule. If you live in CA, or NJ, or IL, ... my sympathy to you.

Without knowing a person's tax situation, you cannot advise them to take any certain number of exemptions.
When preparing taxes and giving tax or investment advice, the advisor needs to ask questions first.

[wheelsup]

Mortimer I have to wonder if you even RTFQ'd. The guy rents, just started his job, and is afraid of owing taxes at the end of the year. You're making this way too complicated for him.

Going from 1->2 on the W4 (I did write W2, not sure why) roughly is $500 more a year in his pocket, which is under $50/month. That isn't a huge difference in the big scheme of things, and with interest rates below 1% is it really worth the $3 in interest he'd earn on that money (even if he got to keep it all, which I doubt he would without running the #'s) to make $3? Really? KISS.

The point of the W4 form is to approximate the amount of taxes you need to pay. Your worksheet is great for someone who itemizes but this guy most likely won't even be able to come close to $6k in deductions on $38k in income, and if he does the IRS is going to flag him.

To the OP, if you want to increase $$ at the end of the month move to a lower tax state or no tax state. CA income tax is some of the highest in the country.

Deductions are great if you can get above the standard amount which is almost $6,000. If you don't have mortgage interest or charitable deductions amounting to close to that amount don't even bother. Student loan interest is above the line and will be deducted anyway.

[mortimer]

Originally Posted by wheelsup

Mortimer I have to wonder if you even RTFQ'd. The guy rents, just started his job, and is afraid of owing taxes at the end of the year.

I'm trying to make this suggestion of a spreadsheet general. I'm well aware of his situation.
I only mentioned the fact that someone might itemize, but didn't include it.
You might also note that I used the Standard Deduction for a single person and only
used one other type of income as an example - then jumped to the end of the 1040 form.
The example was customized for Forever Blue, but the method works for anyone.

wheelsup, I have to wonder if you were able to FollowTFExample.
I'll give you a pass on the W-2/W-4 thing. I believe you.

This thread isn't about Forever Blue, it is about safely cutting down on paycheck deductions.
A person might start a thread, but they don't own it and my advice works for anyone.
Lots of people ( but not enough ) use the search function to get their questions answered.

Again, just throwing out numbers for exemptions doesn't make any sense.
How do you know that the employer actually got it right? How do you
know that the dollars projected out for the rest of the year will work out?

Originally Posted by wheelsup

You're making this way too complicated for him.

The OP is a teacher and working on an advanced degree. I'm pretty sure they can manage a five-line spreadsheet.

It's only 1/10th of the way into the year. Unless one has a handle on what they are going to earn, there is no way to know what they are going to owe.

Unless one has a handle on what they are going to owe, they won't know if they are close enough
on their withholdings. Some people like to wing it and some people want to get things really tight.

As an accountant, I like to know. I shared the method I use. I'm sorry that it bothers
you that I explained how to get things right. I've given this method out to lots of friends
and co-workers and it is always dead-nuts-on. If someone finds filling out a five-line
spreadsheet too "complicated" they can always follow your advice. Good luck to them.

Finally, note that the OP lives in CA. In CA, they consider anyone earning over $44,814 to be rich
enough to be in the top marginal rate of 9.3%. Most other states don't max people out till they are
earning well into six-digits and they max out at about 1/2 CA's rate. CA taxes add around 50% to
the tax burden of people that don't earn very much money. It's twice what most states add.

I'm always amazed and amused when someone starts getting their first paychecks and finds out what they really take out.

[destinedtodave]

Mortimer,

By "inputs" I was referring to making the spreadsheet more of a model that can be used for differing scenarios (that way easily comparing tax liability for changes in # of exemptions). It might seem odd, but doing things like this is an interest of mine. Anyways, as is probably evident, my knowledge of US tax liability leaves much to be desired (my only other full-time job since graduating required me to pay Korean taxes).

[Mightyqueen801]

Originally Posted by Forever Blue

I get paid only 1x/month & I'm trying to rent a nice apt in the high cost of living that my city is & no, moving to another city/state is out of the question. The rent's a good $1300+/month, but even with regular basic bills & zero debt, zero credit cards to pay on, etc., my grand total is about $2000/mo in rent & bills, so as you can see w/ me taking home $2200/2300, I'll only have a couple hundred or so left over every month & that's cutting it way too close. I didn't even count fun spending such as shopping or travelling.

kodaka, thank you for the two links. I'll look at those. I'm aware about my health insurance plan & what's taken out for that. The taxes are the main bulk of it for me being taken out. I work for a school district (but not technically a teacher), & there's $100/mo being taken out for this union thing that's mandatory that I don't give a hoot about, but they're taking it out!

Anyone else have any comments/ideas? Anyone have any ways to cut down on the basic bills? I DO want my internet, cable TV, & cell phone. That's about the only extras I want/need.



Yes, I've heard about this & my tax preparer even said to put "2" on my W4 form. My mom said to alternate & turn in the W4 form w/ "1" on it for 1/2 the year, then "2" the other 1/2 of the year, so I hopefully won't owe when it comes to be tax time. I've never put "2" yet. I'm a tad worried that I'll get caught & in trouble, but I guess I could try it for a few months.

You won't get in trouble. After a certain number--I think it's 12--payroll has to report it to the IRS, but not TWO. I claim 4. I had to pay a few hundred dollars in taxes last year, so I'm chopping it down to 2 this year.