The IRS requires that your total withholding tax for the current year be equal or greater than your total tax liability for the prior year.
Q. I’m changing jobs and I’m not sure the best way to decide how much I should have withheld in taxes. My husband does side contract work and he doesn’t pay estimated taxes, so at my job now, I have them take out more each week to cover his taxes too so we don’t get slammed at the end of the year. Advice?
A. Figuring out — ahead of time — what taxes will be due can be a challenge. But you can make smart guesses to ease the process come April 15
For starters, taxes can be tough to estimate because the withholding tax schedules do not take into consideration itemized deductions, said Howard Hook, a certified financial planner and certified public accountant with EKS Associates in Princeton, N.J. They also don’t adequately account for two high-income earners where the lower tax brackets have already been filled with the first spouse’s income, he said.
“The fact that your husband does not pay estimated taxes on his side work does make things more difficult,” Hook said.
That said, the answer to your question depends largely upon the amount of income you and your husband are currently earning, said Steve Gallo, a certified public accountant with U.S. Financial Services in Fairfield, N.J.
Article by: Time.com
Read full article: http://time.com/money/3921130/taxes-paycheck-withholding/