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Married or married and higher single tax level

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  • Married or married and higher single tax level

    I wanted to know what are the pros and cons of checking either of these boxes on w-2. I recently changed jobs , my previous job I checked married but at single rate, however now I'm within the VA system, and even though salary is the same my take home is much less. At my previous employment it seems that the more I had deducted prior to taxes made my take home more, however for VA it's the opposite. Should I change from married but taxed at a single rate to married? i am 2years post residency.


  • #2
    Why is your take-home a lot less?
    Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087


    • #3
      Very weird but VA divide salary by 26 (for 26 weeks in yr) and my previous job divided by 12 (for months in yr the by 2 for biweekly payment) both result in different totals. So as an example my before tax for  biweekly VA would be 11,500 but for previous job is 12,500.


      • #4
        If that's the only reason your net is different, then you will have the same amount of taxes withheld overall. You just get two extra paychecks from VA. iow, if you were happy with the withholding on your form 1040 before and nothing else has changed (itemized deductions or other income, for example), then there is no reason to claim any differently on your W4 form.
        Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087


        • #5
          Thank you for clarifying.


          • #6
            The difference between Married or Married but withhold at at a higher Single rate is the amount of federal taxes are withheld from your paycheck.  What you need to do is do a quick analysis (now is a good time since you're probably working on filing 2015 taxes) of what withholding election is right for your situation.  Using the information from your post here is the quick and dirty (disclaimer:  this is informational only and please consult with your tax professional before making any changes):

            Annual pay: 299,000 (11,500 x 26 pay periods in the year)

            Married, no spousal income

            Max out your 401(k) at 18K a year

            Standard deduction and no kids

            Your annual tax liability is about 61K.  If you withhold at married and zero exemptions the taxes withheld from your paycheck would be $71K and you will get a big refund.  Withholding at single and zero exemptions would take out even more taxes of about 81K.  My goal is to get as close at zero delta as possible so that I don't have to pay a big tax bill, nor do I finance the gov't at zero percent interest.

            So play around with the assumptions and see what's right for you (obviously there are a lot of other factors that would change the outcome).  Or just file your 2015 taxes and adjust accordingly.