Any Way to Cut Down on My Paycheck Deductions? (credit card, debt, 401k)
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I finally got hired & am working my dream job that I worked very hard in school for (& still am in school for it) & make about $3200 gross, but after almost $1000 in paycheck deductions, my take home pay's only about $2200!
Is there any way to cut down on the amt of deductions that I have being deducted from my paycheck? I never dreamed my take home pay would be that low!
Take two dependant deductions on your paperwork in HR instead of one. You will get more money per month/week in your paycheck, but less on a tax return. You can take up to three and get even more, but then you could end up owing money to the gov't at the end of the year. Two is safe. You still have to file one on your taxes at the end of the year. It just depends on whether you want your money now or later.
I finally got hired & am working my dream job that I worked very hard in school for (& still am in school for it) & make about $3200 gross, but after almost $1000 in paycheck deductions, my take home pay's only about $2200!
Is there any way to cut down on the amt of deductions that I have being deducted from my paycheck? I never dreamed my take home pay would be that low!
I propose that NO deductions be taken from your paycheck for taxes and people should have to mail in their tax liability every quarter. Once people see how much government costs them they will quit asking for more.
I propose that NO deductions be taken from your paycheck for taxes and people should have to mail in their tax liability every quarter. Once people see how much government costs them they will quit asking for more.
Once people see what such a proposal would cost in additional government work ...
Probably a better question to ask is what else is being deducted? Taxes aren't the only thing that reduce your take-home pay. Too often, new hires do not ask specifics about health insurance plans and don't realize how widely they vary--I've known some people to pay as much for their health insurance premiums as they do in taxes. The cost can be substantial. Unfortunately, there's not much you can do to reduce that cost after you've accepted the job offer.
Aside from that, how much are you contributing to your 401k and health savings account? Both are deducted pre-tax so they reduce the amount upon which your tax deductions are calculated. If you are single or married with no children, the best way to reduce your tax burden is to contribute the max to your 401k. Also, be sure to take advantage of the health savings account, at the next enrollment period, if you aren't already (don't over contribute).
If the rest of your deductions cannot be improved, I would strenuously advise you to take the time to calculate your particular tax burden before you change your exemptions. It's not really that hard. You can look at this year's tax tables here. And do a quick back-of-the-envelope calculation of what you will owe or be refunded based on your current exemptions and withholding here
It's certainly possible that you can increase your deductions without ending up owing at the end of the year. But it would be unfortunate to to increase your exemptions only to find out that you didn't pay enough in each paycheck to cover your bill at year's end. Remember, each exemption is only worth $3700 a year. Increasing your deductions by 2 as Thursday007 says would only increase your paycheck by $300 (assuming you are paid bi-weekly). That's not much to benefit from if you end up with a huge bill in April.
Probably a better question to ask is what else is being deducted? Taxes aren't the only thing that reduce your take-home pay. Too often, new hires do not ask specifics about health insurance plans and don't realize how widely they vary--I've known some people to pay as much for their health insurance premiums as they do in taxes. The cost can be substantial. Unfortunately, there's not much you can do to reduce that cost after you've accepted the job offer.
Aside from that, how much are you contributing to your 401k and health savings account? Both are deducted pre-tax so they reduce the amount upon which your tax deductions are calculated. If you are single or married with no children, the best way to reduce your tax burden is to contribute the max to your 401k. Also, be sure to take advantage of the health savings account, at the next enrollment period, if you aren't already (don't over contribute).
If the rest of your deductions cannot be improved, I would strenuously advise you to take the time to calculate your particular tax burden before you change your exemptions. It's not really that hard. You can look at this year's tax tables here. And do a quick back-of-the-envelope calculation of what you will owe or be refunded based on your current exemptions and withholding here
It's certainly possible that you can increase your deductions without ending up owing at the end of the year. But it would be unfortunate to to increase your exemptions only to find out that you didn't pay enough in each paycheck to cover your bill at year's end. Remember, each exemption is only worth $3700 a year. Increasing your deductions by 2 as Thursday007 says would only increase your paycheck by $300 (assuming you are paid bi-weekly). That's not much to benefit from if you end up with a huge bill in April.
Increasing exemptions works particularly well with people who are property owners and personal business expenses and can itemize over their standard deductions. I always took 2 exemptions. One year the Controller did 3 and wasn't suppose to and I ended up with an I owe you $3000, however, I did itemize my taxes and ended up with a refund anyway. It's why I suggest to not go over 2.
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.
Quote:
Originally Posted by Thursday007
Take two dependant deductions on your paperwork in HR instead of one. You will get more money per month/week in your paycheck, but less on a tax return. You can take up to three and get even more, but then you could end up owing money to the gov't at the end of the year. Two is safe. You still have to file one on your taxes at the end of the year. It just depends on whether you want your money now or later.
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.
Last edited by Forever Blue; 01-25-2012 at 07:27 AM..
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.
There is a frugal living forum here on CD. There are tons of ideas about how to live cheaply.
Consider a part time job on weekends or evenings to get more income. Not sure if have time for that if you are still in college.
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