Is it better to have more or less withheld though? I always heard you should get your withholding as close as possible to what you'll actually owe. But my dad says I should withhold more so I get a big refund. Who's right?

From a purely financial perspective, it's better to have your withholding match your actual tax liability as closely as possible. When you overwithhold, you're essentially giving the government an interest-free loan of your money throughout the year. However, some people prefer getting a refund because it feels like a "bonus" and helps them avoid the risk of owing money at tax time. It really comes down to your financial discipline and preferences. If having more withheld helps you save money you might otherwise spend, there's some psychological benefit to that approach.

This is a really good point! I made this exact mistake my first year working during college. My withholding was way off because I didn't indicate I was a dependent. OP, definitely check with your parents about whether they claim you on their taxes!

Does it matter if I use annual totals or do I have to enter the monthly amounts? My 1095-A has both.

You should definitely enter the monthly amounts rather than annual totals. Form 8962 calculations are done on a month-by-month basis, especially if your coverage or family situation changed during the year. Turbo Tax will walk you through entering each month's values from all three columns on the 1095-A. This might seem tedious, but it's necessary for accurate calculations. If you use annual totals when you had changes in coverage or family size during the year, your Form 8962 calculations will be incorrect and could cause problems with the IRS later.

The repayment amounts are set by law and based on income brackets. It's not negotiable with the IRS unfortunately. The cliff between income brackets can be really steep - a few dollars can sometimes make a big difference. This happened to my sister last year - her income was just $100 over a threshold and it cost her over $1,000 in additional repayment.

Did you need to get an EIN number to properly employ your nanny? And are you using a specific payroll service that specializes in household employees?

Yes, I had to get an EIN which was surprisingly easy - took about 10 minutes on the IRS website. I received it immediately via email after completing the online form. I use HomePay which specializes in household employees. It's a bit pricier than some general payroll services, but they understand all the household employee nuances like state-specific nanny taxes and how to properly handle non-taxable benefits like transportation reimbursements. They also provide my nanny with professional pay stubs and handle all the quarterly and year-end tax filings. Makes the whole process almost completely hands-off for me.

It's actually $2,500 for 2024 and will likely be around $2,600 for 2025 after inflation adjustment (IRS hasn't announced final 2025 numbers yet). So at $220/month, you're paying about $2,640 annually - possibly just over the threshold. But there's another rule - if your niece is under 18 and childcare isn't her primary occupation, you don't have to withhold FICA taxes. However, you might still need to issue a W-2. Check Publication 926 (Household Employer's Tax Guide) on the IRS website for all the details.

Oh that's really good to know! So if we owed $2000 for 2024, as long as our withholding for 2025 is at least $2000, we won't get penalized even if we end up owing again? That seems more manageable than trying to predict exactly what we'll owe.

That's exactly right! As long as your total withholding for 2025 equals or exceeds what you owed for 2024 ($2000), you'll meet the safe harbor requirement and avoid penalties even if you still end up owing when you file. This is often the simplest approach because you don't have to predict your exact tax liability. Just make sure your withholding meets or exceeds last year's total tax (not just what you owed at filing time, but your total tax liability from last year's return). Many people find this much easier than trying to calculate quarterly payments.

This is exactly what happened to us! We both checked "Married" thinking it was the right thing to do, but ended up owing $3,400 at tax time. After fixing our W-4s to account for two incomes, our withholding is now spot on.

Some tax software allows you to download your W-2 info as a CSV file which you can then import to Excel. Check if your employer's W-2 provider offers this. I use H&R Block and they have a feature to export the data.

Thanks for the tip! Just checked and our payroll provider (ADP) actually does have an export option. This will save me so much time on my spreadsheet setup.