It’s Tax Season! I like this time of year, tax season 🤯 I had a friend once tell me that he would relish having a six-figure tax bill… because just think how much money you would have to make to have that big of a bill! Fortunately, or unfortunately, my annual tax bill is nowhere near that, but it still stings when I step back to look at total income from my W-2 job and see nearly 25% taken right out of the gate in withholdings. Let’s talk!
It’s around this time of year when I used to revisit the number of Allowances I put on my W-4. But this year (filing 2024 for tax year 2023), I came to learn, perhaps belatedly, that the simple Allowances calculator is gone. Now it’s replaced by this “simple” calculator from the IRS. What a joke! There’s nothing straightforward or simple about this calculator for complex tax situations such as mine. I have rental properties and must schedule multiple Schedule Es and Schedule Cs all in addition to Investment gains, and my regular W-2.
All in all, I ended tax year 2023 with a hefty refund due to me. I don’t like giving the government free loans. The power here is truly unfair and lopsided because if you owe the IRS too much money at the end of the year you get penalized and get to pay interest on top of that for the backpay, and yet my overpayment from withholdings I don’t get a dime of interest on that. Don’t be like me and withhold too much money from you W-2 paycheck, especially if you have property or business losses on your side hustle.
So, like any crafty but honest taxpayer, I went to the IRS calculator to try to figure out how to fill in a new W-4 form so that I would be closer to net neutral for the next tax year 2024 filing in 2025. Come next tax season in 2025, I don’t want to owe any money, and I myself don’t want any money in a refund. I want to maximize the amount of money in my W-2 Take-home pay, while also not cutting so close that I owe a lot of money, and don’t get penalized.
I found the IRS calculator way too complicated and convoluted, especially because I have my prior year tax filing at my fingertips. I searched and eventually found this calculator that made the calculation far more simple, straightforward, and easy to understand. Now I share this calculator link with you.
Of course, time will tell if my inputs into this calculator were accurate. A year! 🤞the numbers all work out well. But as they say, when it rains it pours ☔️ so take an umbrella.
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