Overpaying And Payroll Taxes | How To Reach Your Paycheck Stub

VIDEO TRANSCRIPTION – Overpaying And Payroll Taxes – How To Reach Your Paycheck Stub. Had two interesting conversations this week with two separate clients. They both thought that they were overpaying in taxes. One client was grossing about $150, the other client is married and he’s grossing roughly about $1.1 million.

Hi, I’m Steven D. Cooper, also known as Coach Coop with Coopers Accounting Service because your financial freedom matters. If you’d like to learn more great tax tips, download our popular financial guide at our website yourfinancialfreedommatters.com or click on the link below this video.

And talking to the client that makes roughly about $1.1 million, he was quite adamant that he was overpaying in taxes. So I asked him, okay, let’s look at your paycheck stuff. And looking at your paycheck stuff, he wind up was paying roughly about 20%. Now, he should have been least 25 to 28%.

With that being said and done, when we went through the numbers and went through his paycheck stuff, we find out what he was claiming on his W-4. For those of y’all who do not know what a W-4 is, it’s what you fill out typically, single and one, single and zero, single and two, or married and one, married and zero, married and two. 

That’s commonly what you fill out. With that being said and done, find out that he was claiming married and zero. So when we did the percentage, he was actually at 22 percent but when we analyzed his bonuses and other incentives that he having received money from one of the bonuses they was only taking down 11 percent.

So throughout the year it was inconsistent and because it was inconsistent he then realized that he was not paying the correct amount. As a result of this, he asked me simple question. What do I need to do to fix this? I said, for now, you and your wife claim single and two each, and we’re going to monitor your paycheck stubs for about two to three months.

As a result of this, we then can verify that you should be self-adjusted between 25 and 28%. Now, in theory, he should be at 37%, but because he does have a couple businesses that incur losses, the losses drop Pemina’s wife down to roughly 28 percentile.

That’s where the ideal benchmark we want you to be at. So I’m going to recap this. When you look at your gross wages and you look at your federal withholding, you should be minimum 10 to 15 percent. Simple math. If you gross $100,000 a year, you should be being withheld roughly 10 to $15,000 a year. Now, then how do you calculate the state? 

The state should be half of what your federal withholding is. So if you have $15,000 federal, your state should fall roughly around $7,500. That is usually the benchmark.

There’s various things that can change that depending on the type of Benchmark benefits that you get, but we want to give you a standard idea of what you should be claiming on your taxes, on your tax returns to make sure that you are not overpaying in taxes and you definitely don’t want to underpay in taxes.

For more easy financial tips, sign up for our financial tip newsletter by going to yourfinancialfreedommatters.com or click on the link below this video. If you like a free 20 minutes smart money consultation, call us at 562-436-2600. Well again, I’m Steven D. Cooper, also known as Coach Coop with Coopers Accounting Service. 

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