So,hey guyz wassup ,how are you all
So,hey guyz wassup ,how are you all
So,hey guyz wassup ,how are you all
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Tax Withholdings Explained! (How Your 2018 W-4 Affects Your Paycheck) - Duration: 41:41.
in today's video we're gonna be talking about the w-4 and tax withholdings I'll
be teaching you how you can dominate your taxes in 2018 and beyond now this
is the first part in a series of videos I'm gonna make around this subject not
I've literally spent hours diving into various IRS publications to be able to
present the information I'm going to be showing you today I'm gonna talk about a
few things right now on the whiteboard then we're gonna look at actual examples
on screen to help you understand how your w-4 works and how it affects your
tax withholdings versus how much tax you're gonna owe or not owe at the end
of the year when it comes to your paycheck so that's what I want to talk
to you guys about today now unfortunately this is if if there
was one form if there was one area tax I wish our school system would cover this!
would be it this is such an important life skill I
don't know if you guys know this but ninety roughly ninety percent of the
people in the US who work make their living as employees and even those who
are self-employed a high percentage of them pay themselves wages and have to
fill out a w-4 as well and so we're gonna cover this step by step by step so
that you can not only see it from the employees side but also from the
employer side as well because I really feel that you have to understand how it
works from the employer side to understand how your your the tax is
being withheld from your paycheck and how they come up with that number of
amount of tax being withheld from each and every paycheck you receive and if I
lose guys at any point don't worry feel free to leave comments
in the comment section down below and I have downloadable materials in the
description section right below this video so make sure you take the time and
to check it out it's real quick guys what I'm about to show you is not tax
advice so please don't take it that way but it is definitely for your
entertainment and education and I think you will learn a lot from this but
always consult with a professional in your area if you have any questions or
uncertainties about your taxes let's dive into this okay when it comes to
your paycheck there's really two primary methods
when it comes to how much federal income tax and that's what we're talking about
here is how much federal income tax is withheld from each and every time you
get a paycheck on your payday from your employer now there's two ways that's
calculated one method one way that's calculated is the percentage method the
second way is the wage bracket method tables now if this doesn't make sense to
you it's not supposed to but in a minute I'm going to show you on screen what
they are and how it works to understand how this all works guys you're gonna
have to know how it works from the employee side the employer side and then
from the IRS side and all three of those pieces are going to be put together so
it all will make sense in the end and this is just part one of the video
series I'm planning to Bruce three or four videos on this series and telling
until it's totally done to give you guys a very complete overview like I don't
think it's ever been done before on YouTube so that you guys truly
understand how this works so it would mean so much to me guys if you comment
on these videos if you'd like the videos that will help it rate higher and search
and get this information out there to more people why are we doing this it's
so there's a couple reasons why it really the first reasons for financial
planning purposes if you're gonna be able to to be able to save as much money
as you can every month and pay off debt as quickly as possible invest as much as
possible you really have to have a good grasp on how much tax you owe throughout
the year or how much tax to withhold from each and every paycheck because
what could what I've seen happen and I made a video about this recently as in
my top eight tax mistakes that I see happen all time is if a person is not
withholding enough taxes on their paycheck when it comes a tax time they
can oh tens of thousands and I've literally seen tens of thousands of
dollars owed because they were not withholding enough taxes on their with
paycheck the other side of the coin is a person might withhold too much tax from
their paycheck and the money is if you're withholding too much and I've
seen that too where more people help with over-over withhold thousands of
dollars that could have been in their pocket that they could have been using
to invest they could have been using to pay down their debt saving money or
whatever but instead that money is then trapped with the IRS until they file at
to return because you can't get that money back until you file until in my
opinion I would not give the the I don't want to give the IRS more money than I
need to I would much rather only have a very small refund but I also don't want
to oh so that's why we're doing this video series and so that you understand
your w-4 now like I said earlier guys I really wish this stuff was taught in
school this one would be such a valuable life skill to learn but unfortunately
they do not teach it and I've been doing public accounting now for about seven
years and as far as I know there's no formal education on this I have not seen
it anywhere if you know where a person can find a formal education on this
particular topic let me know but I have not seen it you
know when I was getting my accounting degree at the state university I
attended they didn't cover this at all or are next to very little anyways and
then even when you're going through the process of obtaining your CPA license
I've done they you know you don't really cover this stuff and they're either you
talk about general tax planning and federal income taxes but not to this
level of detail not to where it can help the average person and and there's so
many people across the entire country that this information can help so now
let's really dive into the details
all right ladies and gentlemen here we are all right I really hope you guys get
something out of this because I put a lot of time into this and you're about
to see why let's start with just some basics here with your w-4
luckily chipper has been so kind and so so open to helping us out he has
actually volunteered to show us his w-4 chipper
show me your w-4 please yes saya act you'll service okay so we're gonna go
over the exact example that I've put together for you guys of chippers w-4
here in just a moment but there's a couple things I just want to talk to you
guys about first let's start with with your w-4 form itself which is basically
you know we're talking about this form right here as you guys can see this is
what I'm talking about now when you start a new job you're probably used to
getting this you're gonna get the your payroll person or HR person is gonna
give you one of these forms and tell you to fill it out and if for most people
and used to be this way for myself but it feels like I get like a pop quiz it
feels like when you walk into a classroom you get a pop quiz and you got
to fill it out and you're like not sure of what the numbers should be on here or
how to fill it out just correctly you just hope when you turn in that pop quiz
you hope you did as good as you could you know you give it to your payroll
person they they not sure if the numbers are right and legally they can't tell
you how many how much to with how many allowances to indicate on your w-4 or
things like that because they're not gonna be the ones held responsible for
your tax situation they have no liability and so that is why it's up to
us each individual to fill us out for ourselves so the more we know about it
the more accurately we can do that now with the w-4 there's a boxes and we're
gonna I'm gonna go over this one by one here in a second but really what we come
down to is figuring out the number of allowances and so allowances I want you
guys to think about it's not it's not the allowance you're your mother or dad
pays you when you do your chores if you're lucky enough to get an allowance
but really allowances refers to deductions so the more deductions you
have think of allowances as deductions so the more so so when you think about
allowances I want you to think of like tax deductions
so the more tax deductions you have the less tax we have to pay right so the way
this works is like this so the higher the number that we list here under
allowances the less tax is gonna be withheld from our paycheck so the higher
the number of the allowance is the less tax is withheld because it's because
we're getting more tax deductions that we're gonna OLS so that's why less is
withheld now let's reverse this let's reverse it so the the fewer number of
allowances the more tax is withheld from our each and every paycheck so the fewer
number of allowances means we have less tax deductions the more tax has to be
withheld from each and every one of our paychecks so if we put 0 here it's gonna
withhold the maximum amount of tax from each and every paycheck and then on top
of that you see here in box 6 we can even have more withheld if we want to we
can say well okay well hold you know I wanted to claim zero allowances but then
also withhold another $200 per check or whatever it may be for you so that's how
I would like you guys to interpret and think about allowances so that the next
the next thing I want to go over with you guys real quick is what actually
happens when after we fill out after a person fills out their w-4 what actually
happens with that well what it what happens is you give it to your employer
and your employer keeps it on file and probably 90% of the time or more this
information this w-4 form never goes to the IRS the only time it will go to the
IRS is if the IRS specifically requested which is very rare and I have not heard
I have not seen that happen or I have not heard of that happening so it's only
when the IRS requested that's when the employers have to turn it over to them
but most of the time this is just to give to your company's bookkeeper a
payroll person and then they're going to figure out how much federal income tax
state income taxes well if if if you live in a state that has state
income tax like California where I live well they're gonna look at this
information that you filled out and it's gonna determine it's gonna go from this
form and then to the payroll person and then it's gonna spit out a number of tax
withheld on your paycheck and then your employer remits those taxes to the IRS
later on when they file their quarterly SAR monthly monthly tax deposits so
that's kind of how that works so it never goes to the IRS it's just very
rare when that happens okay now I want to show you guys what your employer sees
on there and when they're figuring out how much tax to withhold from your
paycheck based on your w-4 that you provided them okay so then they'll order
to find that no like I said earlier we really have to go
understand this from the side of the employer to understand how this all
works there's no there's really not another way I know of how to explain
this other than to show you with real examples and then let's we're gonna go
through the full process here okay so this is IRS Publication 15 I want you
guys to remember this IRS Publication 15 this is circular eat employer notice it
says employers Tax Guide so this is what your employer is trying to figure out
when they're dealing with your each employees taxes okay so then now I'm
going to show you there's a second ago we talked about the still on the white
board back there but there's the percentage method and then there's the
wage bracket method tables that we're going to talk about so let me show you
what those are real quick guys just so you guys have an understanding and then
we're gonna what they are and then we're gonna go through an actual example right
of this so your employer uses these tables and I'm flipping to it real quick
to figure out your taxes so there's two of them in total so here we go so here's
the if you go to page 46 and all of this I have links to all of these materials
and all of these materials are directly from the IRS website except with a
spreadsheet I'm gonna show you which I created myself but you're free is
downloadable for free it's just to be used as an educational tool as you're
gonna see it's not to be used for like actual tax planning and tax advice what
I would like you to do with that when it comes to you actually like planning
figuring out what your withholdings should
I want you to use the IRS calculator on the IRS website last month or so they
released it the 2018 withholdings calculator well I'll show you guys that
in just a minute okay so here's is the percentage method
tables for income tax withholding now I'm not going to go over this in crazy
detail just yet but basically once your income gets to a certain point we can't
use the other method we can't use the wage bracket method we have to use your
employer has to use the percentage method tables for income tax withholding
now either way should get you the same result or roughly the same result of
withholdings so and as you guys can see I want what I want to point out real
quick is that notice it follows the new tax brackets so 10% 12% 22% this follows
the new 2018 federal income tax brackets so that's how it state that's how your
withholdings are supposed to keep in line as you get each check paycheck
throughout the year when you look at your paycheck stub that's how you can
help helps keep you on track of how much you need to withhold throughout the
course of the year to be okay and caught up on your taxes okay then so this is
this is what the percentage method tables looked like we're gonna go over
an example of that just a minute the other one if I flip to it again here's
what the wage bracket method tables for income tax withholdings look like and
there's a lot of different tables and it covers your different filing statuses so
if you're single and then it first it covers your filing status so if you're
single you use this one and if you get paid weekly you use this one it also
covers that one let me flip the page so here's know this that continues that
okay so then here's for a married person who gets paid weekly if I keep flipping
then you have a single if you keep flipping and then we're on single people
who file single but they get paid bi-weekly personally I get paid
bi-weekly so I would use this one if I were using this method to calculate my
withholdings this is what I would be looking at now like I said this only
covers income so far like it only goes so far down but this shows let me show
you guys he says and wait it at your wages are at least this but less than
this that this and then these numbers across here determine like this is how
many exemptions or allowances you're claiming
not exemptions I'm sorry this is how many allowances you're
claiming on your w-4 and then by using this information you're able to
determine how much to withhold on your taxes and I'm but I'm gonna show you all
of this guys right now so let's go over a real example and I've looked I've done
multiple calculations and I've looked this over multiple times to make sure
this is correct and it should be if you guys notice anything in my spreadsheet
that is incorrect please let me know I would love to update it for you guys and
I want it to be always as accurate as possible okay so let's go to chippers
w-4 now here we go so this is the front first page of the w-4 and chipper has
been like I said kind enough to let us use his information so we just put his
first name here he doesn't have a middle initial and I put last name the cocktail
so chipper the cocktail his full name his social security number we enter that
there we have his home address it's two for one cocktail way city or town is on
Cage City and then he's single so we marked the single box if you're married
if a person is married they might mark one of these of course now because this
doesn't get filed with the IRS even if you are married you can you can still
mark this as a single because it doesn't matter it's just kind of it's just gonna
like determine how much is withheld from each of your paychecks this does not get
get filed with IRS mine actually is still marked as single even though I'm
married but I need to update mine now with a new tax bracket so I'm gonna
probably gonna fix that coming up here but this is you know something I need to
go do myself because what's nice is you should always
I want people to always be thinking about if your income changes if your
filing status changes if you have children then these are reasons to
consider updating your w-2 I mean I'm sorry not w-2 but your w-4 on the annual
basis you might want to update your w-4 on an annual basis depending on your
situation okay then for chipper unbox 5 we're gonna see that he's going to claim
to two allowances and we're gonna walk through that right now just real quick
for some people they are exempt from withholding income tax they have an
exemption from withholding that's really for people who Zink
is solo like $6,000 or less or if a person is already overpaid has such a
large overpayment from the prior year's taxes that they have applied to the
current year then they might not have to have any tax withheld on their check
because they still will zero on this year's tax return so but for I'm not
really talking about if you want to learn if you're exempt from withholdings
look at this first section and the instructions but I don't think most
people are most people are gonna have to withhold tax from their check and so I'm
really talking to the people who need to withhold federal income taxes here and
not people who are exempt if you're exempt you probably are gonna own Ickx -
nothing in taxes anyways and so this is really that's really not who the video
is for but if you are exempt you can just follow the instructions in this
first part right here and and there's very little to fill out ok in terms of
accuracy now the IRS basically states regarding this paper form now there's
this paper version of the form what we're looking at electronically here of
the w-4 and then there's the IRS withholding calculator on the IRS
website now which one's more accurate well absolutely the one on the IRS
website the IRA the the withholdings calculator is extremely more accurate
than this this is not like far off the beaten path but it's much easier to if
you're attacked if you have a more complicated tax situation if you're
married if you have multiple jobs if you have all these different credits these
tax credits then I'll then don't even bother with this really I mean you're
the you're gonna fill out the number of allowances and give this first part to
your employer but use the IRS withholdings calculator all the way it
will save you so much time because all the calculations are built within it and
so let's keep walking down this example here guys so chipper now has two
allowances how do we come up with that go down here now let's go to the the
second page or the third page I should say personal allowances worksheet so
chipper is gonna enter one for himself because it's just him and then so it
says B if you file as married filing jointly no he doesn't enter one if your
files head of household well chipper is not a head of household it says enter
one here if you're a single or married filing separately
and have only one job that is chipper so he's got a single and he only has one
job so we're gonna put a one undie and so then we're gonna go to the line
he doesn't apply for the box or this part was section II he doesn't have to
get the child tax credit because he has no children credit for other dependents
he does not have any other dependents so there's nothing there
other credits he doesn't have any other credits to apply for so his is easy so
we go down the line H and we add up lines a through G and we enter the total
here so that's two so that's where this two is coming from so now that two is
placed right here on line five on the w-4 and that's how many allowances he's
gonna show the employer all right so that's you guys follow me there I'm
hoping you follow me so far now let's go down let's go back down to that
worksheet now if honestly like there's there's this next section of deductions
adjustments an additional income worksheet I would don't even personally
like I don't even bother with the section I would just if if you want to
get like that detailed then I are I would just go to the IRS withholdings
calculator on their website and use that I would stop here so like right as I got
to here if it became more complicated than this this is I would stop
completely and go straight to the withholdings calculator but if if you
don't have a complicated tax situation then pages one through three of this
document will suffice I'll leave a link to this document below so you have it
just in case you ever it's easy too easy to find you just google it
2018 w-4 if you ever need to find it okay so now you see this number two and
allowances on chippers gonna now turn in this these this that before to his
employer but what is that to mean the two the two actually helps the like I
said the payroll person with with determining how much tax withhold so now
your employer the chippers employer gets this w-4 they now they as far as I know
I don't know if any employer who's not using payroll tax software and the real
world that's how it's done I have not seen anybody use the actual withholding
tables that we looked at a second ago in the PDF document and
rs.15 I have not seen people using that it would be much too complicated and
much too time-consuming so employers use software and so they go and drop this
and these this information into their payroll software then payroll software
determines how much tax with hold of every paycheck but but the payroll
software is programmed with the the percentage method and the wage bracket
method so it knows all that stuff is built into the software so but that's
where that it's that's how it knows to calculate that tax so now we're gonna
actually look at a real calculation of how woodchipper gets his paycheck how it
all flows out so let's look at my word document now on screen on the pull that
up for you guys right now and I'm gonna walk through one example I've I've given
you two or I've given you three examples and all but for sake of time I'm only
going to cover one in detail just so I can walk you guys through how this works
and how it would affect chippers paycheck okay so here we are guys this
is the spreadsheet I've put together this like I said this is not I would not
use this to estimate your taxes it's not designed for that use the IRS w-4
withholdings calculator alright so this is in this first example we're at single
monthly okay so this is so this is shivers paycheck he's single and he gets
paid once a month okay only one once a month that he's get a paycheck and I've
included down here as you can see us if you're single and get paid bi-weekly and
I've included one example if person's married if they get paid monthly so
let's walk through this and then we're gonna compare the numbers on this
spreadsheet to the actual IRS withholding calculator and what it comes
up with versus what's on the spreadsheet and I'll show you guys how this actually
works this is how allowances work when it comes to your w-4 the real deal here
guys okay so basic withholdings calculator this and all of these
examples we're gonna be using the percentage method to calculate your tax
withholdings but in in this first example i'll show you both i'll show you
how we get to the same result with the the wage bracket tables as well as the
percentage of the completion method all right so this is chipper so his finally
has a single right we know he's single he's single
mingle
hey hey how often is chipper paid well he's paid monthly
we know that shippers paid monthly that's very important and then what is
shippers projected taxable wages now when it comes to planning our w-4 we
have to project our taxable wages now in the next part of this series I'm gonna
give you guys a downloadable spreadsheet I'm gonna cover with you of how to
project your taxable wages it is so important it is the leading factor of
this whole calculation is your projected taxable wages so that's why in the
second part of this series I'm just gonna cover that of how to project them
but let's let's continue down this way so we're we're gonna assume that shipper
makes like forty five thousand year and that's right around the median income of
the average single person in the United States it's right around forty thousand
bucks annually so but he's at forty five
thousand so I'll remember on his w-4 we put that he had two allowances so now
we're gonna actually see what that means and how it all plays out and I've
included some snippets and some screenshots from the this stuff is from
IRS Publication fifteen this is actually in that publication but so you can see
all the information on screen in one place I just have snipped part of this
right here and now so you can see how this works
so the number is highlighted in yellow indicate numbers that came from the IRS
Publication fifteen and so let's walk through this right now alright so we
know that chipper wheat he projects that for 2018 he's gonna make forty five
thousand dollars total of taxable wages so after his 401 K and everything he's
gonna make he projects he's gonna make forty five thousand dollars in taxable
ways it's out then we look at the number of pay periods per year and let me zoom
in a little bit here for you guys so you can see this better there we go
so he's get paid once a month right he gets paid monthly so that means there's
twelve paychecks in a year this simple math so if we divide forty-five thousand
divided by twelve that means in taxable wages he's roughly getting three
thousand seven hundred fifty dollars per check so this is the projected taxable
wages divided by number of pay periods okay so the amount per check as you guys
can see is is this amount right here right three thousand seven fifty
that's what we're projecting so now let's take into account how those
personal income tax allowances affect this calculation so here's the real
numbers and how it works behind the scenes that people never see unless
they're really digging into the detail okay number of first allowances we said
two right so then there is actually a table in IRS Publication 15 that tells
you how much each allowance is worth that's right each allowance has a
certain dollar value assigned to it so over here I've taken this out of the pub
there this is percentage method 2018 amount for one withholding allowance
so for each withholding allowance if you're if you get paid monthly which
chipper does chipper gets paid monthly he makes there it's each allowance is
345 dollars and 80 cents so $345 80 cents let's go back over here so
remember though chipper had two allowances so we take two times three
hundred forty-five dollars 80 cents so total allowances is 691 sixty in terms
of a dollar value so now we come over here follow my mouse cursor please and
notice I have minus six hundred ninety one dollars and sixty cents so what we
do is we take the amount of wages per paycheck minus the allowances of 691
dollars so that means that of the wages he makes three thousand fifty dollars
and forty cents is actually subject to federal income tax withholdings okay and
then now we have to look at the excess over per table for so this is deals with
the wage percentage method okay there are the percentage method for
calculating your withholdings so how where does that number come from well if
we remember earlier I showed you all those different the worksheets that
within publication 15 well here's from the IRS Publication 15 is this the tape
we're looking at Table four this is for people who are single and get paid
monthly well if their income it says income is is over 1100 down here but now
we look at income is over $1100 but not over 3000 $33 well
that's where we're at here because the income subject to withholdings is
between that at three thousand fifty eight dollars and forty cents okay so
then there's a fixed amount of tax as seventy nine dollars and forty cents
plus twelve percent of the amount over one thousand one hundred and two dollars
so this one thousand one hundred two dollars it's coming from right here boom
right there that's where this comes from so now we take the amount of wages
subject to withholding we we subtract the one thousand one hundred two dollars
and we get 1090 640 well that excess amount over that is now multiplied by
the twelve percent and the twelve percent is right here that's where this
is coming from so that means right there from the percentage method we know we
have to have at least two hundred and thirty-four dollars and seventy seven
cents and withholdings okay now I know that's a lot of information to take in
so if you need to rewind the video just to watch that again real quickly
yeah please feel free to do so but I'm gonna keep moving forward and and you're
gonna see how this all comes comes out together here in in the end we're just
about done now so now there's a fixed amount of withholdings it's seventy nine
dollars and forty cents so here's the seventy nine forty it's all right here
so this is why I put these visuals in here because I don't want you guys
searching all over the place for this information but it's all in our s
publication fifteen so now we take the 234 from here and we add the 79 40 from
right here and so the total average federal tax withholdings per check for
chipper is gonna be three hundred and fourteen dollars and sixteen cents okay
so each and every paycheck chipper is gonna have that much tax withheld three
hundred fourteen dollars and sixteen cents and now we know that chipper is
gonna get paid 12 times a year right well now we multiply this withholdings
amount times twelve so the total projected federal tax withholdings for
the year for chipper is gonna be three thousand
seven hundred and seventy dollars and two cents so now let's do a quick rough
comparison of what that amount compares to on the IRS website with using the
withholdings calculator so I'm like I said in the third part of this series
I'll show you in detail how the IRS with all these calculator works but for now
I'm just gonna show you a really quick example so we're gonna come here to IRS
gov we're gonna go down to the w-4 calculator right here click on that and
then if you want the actual w-4 form we were looking at a minute ago this is
where you find it and then see where it says IRS withholdings calculator that's
what we want that is what we want to use to project our withholding it's hard to
calculator with aleene's whoops there we go and if you scroll down here you're
gonna find the actual withholdings calculator I'm gonna click on that and
it's gonna take us to this screen right here let me zoom in because I know
that's hard to read couple of questions that we're gonna fly
through real quick that says what is your filing status on your 2018 income
tax return we know it's single for a chipper but
single can someone else claim you as a dependent we're gonna know and we're
just hit gonna hit continue it's gonna take us to this screen it
says select the total number of jobs in which you are currently or will be
employed it says enter military retirement pay our taxable pensions as
additional separate jobs so we know chipper only has one job in this example
all the rest of this like I said I'll go in detail on another time so we don't
need to fill out any more of this at all for right now you guys you can see it
gets into the tax credits it gets into if you're 65 or older Earned Income Tax
Credit if you qualify for that we're skipping all that we'll go over that and
part three okay let's see hit continue now this is where we actually enter our
projected taxable wages which is why that I think it's so important to have a
firm grasp on what your projected taxable wages are gonna be for the year
because everything else is factored into that everything else is derived from
those wages so all the calculations don't matter if you're that that number
is wrong so you want to get that number right which is why we're gonna look at
that in part two okay so we're gonna drop in it says enter the gross wages
salaries and tips you expect to receive in 2018
now for chipper we know that's five thousand dollars right that's what
that's the example we just looked at mm any bonuses for chipper
no none it says enter to the fete total federal income tax withheld to date on
the paycheck well we're gonna assume I don't really care about that right now I
just want to know in total what it would be for the full year so I'm gonna put
zero here and you have to put C here has an asterisk here you have to put a zero
I'm gonna put a zero in right here and then it says select how frequently
you're paid well we're gonna say monthly because shippers paid once a month right
in our example non wage income this is if you have like dividends interest or
other kinds of income if you have unemployment compensation we're skipping
all that we don't it's not gonna impact our example here now I'm gonna hit
continue and then now it automatically takes into account the standard
deduction but if you if you itemize you can put itemized deductions here we're
gonna assume that chipper gets the standard deduction so there's nothing
else that I need to do here so I'm just gonna hit continue and it's gonna spit
out our result here we go it says based on your responses your anticipated
income tax for 2018 is three thousand seventy two seventy it says based on
your responses your anticipated income tax for 2018 is three thousand seven
hundred seventy three dollars it says to meet your anticipated tax of three
thousand seventeen seventy three change your current withholding arrangement by
zero allowances plus an additional four twenty three and the reason it's saying
that is because it knows that we're in the month of April when I'm filming this
so it assumes that we only have eight eight pay periods left but then the the
thing I want to point out here guys is that this is the number I want you to
look at based on your projected taxable wages this is how much tax federal
income tax you have to withhold to be fully paid in by the time you have to
file your tax return for the at the foot you know during the following year by
the April 15th so this is the number we care about so as long as it's our total
withholdings from our paychecks add up to that amount we're good we're gonna
zero tax that's what we want if we withhold more than that if we withhold
four thousand dollars well we're gonna get a refund when we file our tax return
2004 2018 if we withhold less than that number guess what's gonna happen we're
gonna owe money we're gonna have to owe money when we file a tax return so we
want to be as accurately that's pot as possible with our withholdings and you
really the ideal tax result is zero you don't want to really owe money and you
don't want to have a huge refund now I'm okay being a little overpaid because I
don't want to end up owing money but the perfect tax result is owing zero and
getting in a zero refund because that means you're withholding exactly enough
tax without the throughout the year so that you know you're good you don't have
to think about it another reason I wouldn't really wanted to talk to you
guys about this topic is I don't want people to stress about their taxes
throughout the entire year so the more I can do to help you guys with that the
better off you'll be and the less stress you'll have and the more you know better
quality of life you'll have and now let's look at so we saw this is what our
projected tax is gonna be now let's look at that example on the spreadsheet and
I'll prove to you guys that my spreadsheets accurate right now so let's
go over here back to my spreadsheet and so based on this worksheet we projected
that our total projected federal tax withholdings for the year
would be three thousand seven hundred and seventy dollars that's how much tax
we've paid in okay that's how much tax chippers paid in this example then from
the IRS website we just looked at how much tax we were actually gonna owe and
they said 377 three so our worksheet here is only off by three bucks so in
this example chipper would owe $3.00 when he can 20 with the file as taxes
which is chump change which is means we are extremely accurate in terms of
projecting what our withholdings need to be and that's how it works guys from
start to finish that's how this calculations done that's how it's done
behind the scenes this is what people don't see this is how it's actually
being calculated now like I said this is really just for your education
entertainment don't use this to project your taxes use the IRS withholding
calculator in the next part we're gonna go dive in the detail and take a
professional approach to projecting your taxable wages and how to do that and all
these spreadsheets are completely you can download them in the description
section down below this video and so make sure to check it out I know
this video is long guys but that's why I've included timestamps but I've really
wanted to give you a full overview of how this is calculated because I could
not find this information anywhere on the Internet
and as a person who went through school to obtain a bachelor's in accounting and
who's obtained their CPA license this is not something that's covered now just
real quickly so we see that based on this analysis we learned that each
paycheck chippers gonna have three hundred and fourteen dollars withheld
from each and every paycheck but this was using the percentage method what if
we use the the table method what if we used the wage bracket table method ok
guys real quickly last but not least I want to show you what what if we use the
other method what to calculate chippers withholdings the wage bracket method
tables for income tax withholdings well this would how it would be play out so
here's the so chippers single person he gets paid monthly
remember on his life before he said he had two allowances
well his wages were between this and this and so what we do is we take our
finger come over here like this and then come down heat from the two allowances
column come down here and that is his exact withholdings amount using this
method as its exact same as it was using the the table method are the percentage
method here sorry the percentage method so is either way you do it it's exactly
the same results or should be the same or right around the same but alright
guys I hope you found this information helpful I know this is a long video it
was intended to be long cuz I really wanted to walk you through this through
the entire thing so that I mean they they really should teach this stuff in
school because I I think it's so important for for a person to know how
their taxes are being withheld from their paycheck okay that's it's really
important for me and I'm sure it's important to you to know how much money
to pay in versus how much money you're able to keep for yourself so you can
invest more pay down your debt whatever it may be or save more money it's much
better to that I think it's much better that we have our money vs. given and
also and over pain things like that but we
don't but we do also don't want to be greatly overpaid so that's why I wanted
to walk you through this example if you click on the other examples it'll it's
the same kind of scenario I'll let you guys figure work through these yourself
so you can fully understand it of how I got my numbers but it's all there it's
exactly there and it's all made up through the IRS Publication 15 in this
spreadsheet like I said which is downloadable for free alright guys well
that is all the information I have for you today if you're brand new to this
channel I just want to say welcome I know this is usually my videos aren't
this long but when you come this channel I've been able to help hundreds of
people throughout the country with their taxes investments finances etc those are
the kinds of videos that I produce here on this channel on a weekly basis so if
you're looking really looking to improve in those areas learn more about taxes
and things like that then I would I would strongly suggest you subscribe to
our Channel and please definitely subscribe to our channel to not miss any
of our weekly videos in this series because I have at least two more parts
coming out to give it the give you a full overview in full the health you
truly learn how to plan your withholdings for your for your personal
tax situation to the best of my ability of what I can do here over YouTube and
so that you can always be on top of your taxes and not worried about whether
you're paying in enough or not painted enough throughout the course of the year
at your job all right guys I love you thank you so much if you stuck with me
this long I appreciate it so much you guys are a wonderful audience I'm so
thankful to have you is so it's so nice to be able to interact with you guys so
it means so much to me when you guys drop a like and leave a comment I love
hearing from you guys and I just hope I really hope you found this helpful I
spent hours pulling this information together and honestly I learned so much
more personally pulling this information together because like I said there's
nowhere else out there that you can get this information that I know of other
than diving into the details yourself and seeing how this all works behind the
scenes with that being said make sure to share this information with a friend
make sure you drop a like guys I love y'all peace
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How Many EGGS You Can Eat During Summer In INDIA? Nutritional Value Off EGGS - Duration: 2:46.
So,hey guyz wassup ,how are you all
So,hey guyz wassup ,how are you all
So,hey guyz wassup ,how are you all
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