marriage & child in 2014 -- when to adjust withholding?

[Anonymous]

I'm getting married and expecting a child in 2014. When would you adjust your income tax withholding? Would it matter when you did it for marriage v. child? I'd much rather get my money in each paycheck, as opposed to a refund, but I don't want to do it too soon. Thanks.

[Anonymous]

You'd have to calculate how much you plan on saving in your AGI / tax and then figure out how much you contribute per paycheck and then time it. There's no "oh do it twelve days before your crimson tide" answer here.

[Anonymous]

Make sure you talk to your prospective husband about when you are going to start filing jointly. If you're not filing jointly, then you'll need to figure out who gets to claim head of household and who gets to claim the dependent.

Honestly, if I were you, I'd print out the most recent tax form from the irs.gov site and do your taxes based on your income, with head of household and the extra child exemption, if you will be the one to claim them. Then you can see what sort of refund you'd get and you can look at the calculator for how much each withholding point will change that. Don't forget about state taxes, too.

[Anonymous]

(also, if you are going to be using daycare, see if your work has a dependent care FSA available, and max the hell out of it. I get $5,000 taken out pre-tax, which helps a little toward our $15K annual preschool bill.)

[Anonymous]

I know you said just the opposite, but we never changed our withholding when we were married or had kids, and I prefer it this way. I like getting a refund - find it much easier to save that way. It's like money im never knew I had, and never miss.

[Anonymous]

Anonymous wrote:I know you said just the opposite, but we never changed our withholding when we were married or had kids, and I prefer it this way. I like getting a refund - find it much easier to save that way. It's like money im never knew I had, and never miss.

dumb

[Anonymous]

Just an FYi, the marriage penalty and AMT might surprise you. I would talk to an accountant so you don't end up withholding too much or too little.

[Anonymous]

Both changes will apply to the whole year, so you can do it whenever you want. I would probably wait until you both had your first paychecks, and the IRS withholding calculator was updated for 2014. (Right now it's still the 2013 calculator.)

http://www.irs.gov/Individuals/IRS-Withholding-Calculator

[Anonymous]

Anonymous wrote:Both changes will apply to the whole year, so you can do it whenever you want. I would probably wait until you both had your first paychecks, and the IRS withholding calculator was updated for 2014. (Right now it's still the 2013 calculator.)

http://www.irs.gov/Individuals/IRS-Withholding-Calculator

Very helpful, thanks. I'm also selling real estate, so lots of changes for 2014. No capital gains tax, but it will affect my mortgage deduction. It's good advice though to wait for the new calculators, so I get accurate withholding. I hate getting a refund, and try hard to break even.

[Anonymous]

Anonymous wrote:Just an FYi, the marriage penalty and AMT might surprise you. I would talk to an accountant so you don't end up withholding too much or too little.

+1 I think one of us withholds as married at the single rate and one us takes one exemption and we end up with a small refund.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I know you said just the opposite, but we never changed our withholding when we were married or had kids, and I prefer it this way. I like getting a refund - find it much easier to save that way. It's like money im never knew I had, and never miss.

dumb

It works for me, and I'm pretty happy with my financial position right now, so I respectfully disagree. If I had an extra $500 each month, I'd likely spend it or think I could buy a new car I didn't really need, or whatever.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I know you said just the opposite, but we never changed our withholding when we were married or had kids, and I prefer it this way. I like getting a refund - find it much easier to save that way. It's like money im never knew I had, and never miss.

dumb

It works for me, and I'm pretty happy with my financial position right now, so I respectfully disagree. If I had an extra $500 each month, I'd likely spend it or think I could buy a new car I didn't really need, or whatever.

Completely irrelevant though, since OP doesn't want a refund.

[Anonymous]

Anonymous wrote:Both changes will apply to the whole year, so you can do it whenever you want. I would probably wait until you both had your first paychecks, and the IRS withholding calculator was updated for 2014. (Right now it's still the 2013 calculator.)

http://www.irs.gov/Individuals/IRS-Withholding-Calculator

+1

Agree with PP that this is predicated on knowing how you are going to file, but the IRS calculator will account for that, too. It will give you options (i.e. "this will make you owe some bucks, this other thing will get you a small refund").

[Anonymous]

Don't assume you will owe less taxes because you are married. Unless one of you has an income that is much higher than the other one, you will owe the same or more. We hit the alternative minimum tax (AMT) as a couple although neither of us would hit it if we were single, so we pay more taxes because we are married. With the AMT, a lot of our deductions aren't allowed.

Also, whoever wrote earlier that you could file as Head of Household when you are married is wrong. You either have to file as married filing jointly, or married filing separately. The only way you can file as Head of Household if you are married is if you have been separated for the last six months of the year and you meet various other qualifications as well. Married filing separately is usually a bad deal unless one of you has a low income and lots of medical deductions and the other has a higher income. Because allowed medical deductions are based on a percentage of your income, occasionally it helps if they are high for one person to be married filing separately.

Here are the IRS rules on filing status (including who is eligible to file as Head of Household):

https://www.1040.com/federal-taxes/filing-basics/filing-status/

[Anonymous]

Anonymous wrote:I know you said just the opposite, but we never changed our withholding when we were married or had kids, and I prefer it this way. I like getting a refund - find it much easier to save that way. It's like money im never knew I had, and never miss.

You like giving the federal government an interest-free loan? You people realize that when you get a refund, that's what that money was, right?