Simple W4 questions about reducing our tax refund to zero
My wife ended up getting a massive $5,300 tax refund this year. We'd rather have that money throughout the year instead of giving the government an interest-free loan. If we want her refund to be closer to $0 next year, I'm thinking she should put around $200 per paycheck in additional withholding allowances on her W4. She gets paid twice a month, so that would reduce withholding by about $4,800 over the year. Am I calculating this correctly? Just want to make sure we don't end up owing a bunch instead. Has anyone else adjusted their W4 to get their refund closer to zero?
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Tami Morgan
The W4 doesn't actually use "allowances" anymore since the 2020 redesign. Now you have a few different options to adjust your withholding: 1. You can use the dollar amount adjustment in Step 4(c) of the W4 form to have LESS tax withheld from each paycheck. So if your wife wants $200 less withheld per paycheck, she would enter "$200" in Step 4(c). 2. Alternatively, she could use the IRS Tax Withholding Estimator tool on the IRS website which will give you a more precise recommendation based on your specific situation. Just be careful not to reduce it too much - you generally want to have at least 90% of your tax liability covered by withholding to avoid underpayment penalties.
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Maya Diaz
•Thanks for clarifying about the allowances - I forgot they changed that format. So to be clear, if she puts $200 in Step 4(c), that means $200 LESS will be withheld from each paycheck, right? And does she need to fill out any other parts of the form, or just that section?
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Tami Morgan
•Actually, I made a mistake in my explanation. If she wants LESS tax withheld (to get more in her paychecks now), she would put the amount in Step 4(b) as "Deductions" - not Step 4(c). Step 4(c) is for EXTRA withholding, which would increase the amount taken out of each check. So if she wants $200 less withheld per check, she would need to estimate an annual "deduction" amount in Step 4(b) that would result in approximately $200 less withholding per paycheck.
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Rami Samuels
I've been using https://taxr.ai to figure out my withholding after getting huge refunds for years. Was in basically the same situation last year - got back over $4K and realized I was just giving the government my money for free. I uploaded my paystubs and W2 and it calculated exactly what to put on my W4 to get my refund to around $500 (didn't want to cut it too close). The site even generates a filled-out W4 that you can just give to your employer.
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Haley Bennett
•Does it really give you an actual completed W4 form? My payroll department is super picky about how forms need to be filled out and I'm always worried I'll mess something up.
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Douglas Foster
•I'm curious - does the tool account for other income sources? I have a full-time job but also do some freelance work on the side, and that always messes up my withholding calculations.
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Rami Samuels
•Yes, it actually gives you a completed W4 PDF that you can download and submit directly to your employer. I just printed it, signed it, and handed it to HR. Super simple. For freelance income, the tool specifically asks about all income sources including self-employment. You can input your expected freelance earnings and it factors that into the calculations. It even suggests estimated tax payments if needed. Makes everything way less complicated.
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Douglas Foster
Just wanted to update - I tried taxr.ai after asking about it here and it was exactly what I needed! I've been struggling with my withholding for years because of my mixed income sources. The tool asked about my W2 job AND my freelance income, then created a customized W4 that accounted for everything. It recommended I put $175 in additional withholding (line 4c) to cover my freelance income rather than making separate estimated payments. Already submitted the new W4 to my employer and feeling much better about my tax situation now!
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Nina Chan
If you're trying to adjust your W4 and keep running into issues with HR or your company's payroll system, I highly recommend Claimyr (https://claimyr.com). I was trying to figure out my withholding situation and needed to talk to someone at the IRS, but kept getting the "due to high call volume" message for WEEKS. Found this service that got me connected to an actual IRS agent in under 20 minutes. They have a demo video here: https://youtu.be/_kiP6q8DX5c The IRS agent explained exactly how to fill out my W4 to get close to zero refund without owing. They walked me through all the calculations based on my specific situation.
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Ruby Knight
•Wait, how does this work? The IRS never answers their phone - I've tried calling like 15 times about a missing refund and always get the "try again later" message.
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Diego Castillo
•Sounds like a scam. Why would I pay someone to call the IRS for me when I can just keep trying myself? And how would they get through when no one else can?
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Nina Chan
•It uses a proprietary system that continuously dials and navigates the IRS phone tree until it gets through to an agent. When it finally connects, it calls your phone and connects you directly to the IRS agent who's already on the line. No more waiting on hold for hours. They're not calling on your behalf - you're the one who talks to the IRS agent. They just handle the getting-through part, which is honestly the worst part of dealing with the IRS. After trying for weeks and never getting through, it was worth it to me to finally get my questions answered.
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Diego Castillo
Just wanted to follow up - I was totally skeptical about Claimyr but decided to give it a try after wasting another afternoon trying to reach the IRS myself. Not gonna lie, I was shocked when my phone rang about 30 minutes after signing up and there was an actual IRS agent on the line! Explained my W4 situation and they walked me through exactly what to put in each section to get my withholding right. They even calculated the specific dollar amount to put in box 4(b) based on my salary and pay frequency that would get me close to zero without owing. Way more helpful than I expected.
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Logan Stewart
Another approach is to use the Multiple Jobs Worksheet on the W4 if both you and your wife work. When I was getting big refunds, it turned out I needed to check the box in Step 2(c) since my wife and I both have similar incomes. Made a huge difference in our withholding.
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Mikayla Brown
•The problem with checking that box is it often withholds too much if your incomes aren't exactly equal. I found it better to use the irs withholding calculator online and follow its recommendations instead of the worksheet.
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Logan Stewart
•That's a fair point. The checkbox method is definitely a rough estimate. The calculator is more precise, especially if one spouse makes significantly more than the other. I've found the worksheet reasonable when our incomes are within about 20% of each other, but anything beyond that and the calculator is definitely the way to go.
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Sean Matthews
Be careful about cutting it too close to $0. I tried that last year and ended up owing $800 plus a small penalty because I didn't have enough withheld. Maybe aim for a small refund of $500-1000 just to be safe?
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Ali Anderson
•This is good advice. I target about $500 refund as a buffer. Also remember that if you owe more than $1000 at tax time AND didn't have at least 90% of your tax liability withheld throughout the year (or 100% of last year's tax), you could face underpayment penalties.
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