This ain’t gonna be pretty.

Girl Ninja recently got her first paycheck of the new school year. I’ve been foaming at the mouth, waiting for this day to arise for many reasons: 1) Getting two paychecks is way more fun than getting one…duh. 2) We didn’t really know how much her check would end up being. 3) I didn’t know how much federal tax would be taken out of her paycheck. For today’s blog post, we will only be focusing on point three.

Back in May, I ran a calculation on our estimated 2011 federal tax obligation. The result wasn’t pretty. I estimated we would end up having to write a $1,200 check to the IRS come tax season (this is in addition to what we would have had withheld throughout the year).

Well, now that Girl Ninja received her new paycheck, I was able to make a far better prediction as to what our ACTUAL tax obligation will be this coming year, and to be perfectly honestit made me want to vomit.

Here’s a screen grab of what we are faced with…

Makes me want to cry

So even though we have already paid more taxes this year, than we did all last year, we still are going to be $4,511 behind. What really makes me angry though is that I don’t know what else Girl Ninja and I could have done to avoided this. Even though we are married and file jointly, we both claim “Single” and “0” exemptions to pay in at a much higher tax rate than the W-4 recommends (it wants us each to claim “married/2”). As far as I’m concerned the W-4 is worthless.

What really boggles my mind is that even though GN claims Single/0 on her W-4, she only had $76 taken out for federal taxes, when her gross pay was $1,228. That’s only 6% of her gross pay going to the fed! Does anyone know why?

We have a few options to reconcile this uber-depressing situation. We could either…

  • Make additional federal tax payments of approximately $1,000/month for the remainder of the year.
  • Keep withholding at current rates, and in December dedicate 100% of my gross income to bring us current.
  • Change absolutely nothing and wait until April 14th to send in that $4,511 check.

Part of me wants to wait until the April 14th so I can earn a little interest on that money and stick it to “The Man” a little. But then another part of me wants to bring that sucker current ASAP ’cause I feel like it is a “debt” looming over my head….and in case you didn’t know; I punch debt in the face when I see it!

Have any of you used the IRS withholding estimator? Are you on track with your federal withholding? Why is Girl Ninja only getting 6% of her paycheck taken out? And lastly, which route would you take to satisfy our tax obligation?

42 thoughts on “This ain’t gonna be pretty.”

  1. Very odd. I have a co worker who had a similar problem but forced our company to take extra out of his paycheck for taxes. Is GN eligible for some crazy tax breaks as a private school teacher that you guys are unaware of? You might want to ask her HR department or accounting department for further explaination. Or maybe find a CPA to help you figure it out too.

    That IRS withholding estimator is somewhat complicated to me, seems like many chances to input an incorrect number causing a catastrophic error ๐Ÿ™‚

    I prefer my taxes taken out correctly each payday. I agree with your dislike of having a debt looming over your head until April 15th of next year.

  2. Ya, I owe too. It’s not due for about six months but I’ll probably pay it this week. Have a few other big expenses this month, so I’ll just absorb all the blows in September…yowch.

  3. I would save the money each month to pay off the tax man in April. And I would call up GN’s employer today and arrange to have extra taxes taken out of each paycheck starting now, that way you don’t have this problem next year. I know a lot of companies allow you to do that, I would think the schoolboard definitely would.

  4. Hi Ninja,

    That is rather odd… I have no idea as to why so little is being taken out. However, I recommend that you do *not* wait until next April to reconcile. In general, if you owe more than $1,000 to the federal government during tax season then they will charge you fees for not “paying as you go”:

    Because of this, you will likely want to have Girl Ninja pay estimated taxes to self-adjust for the fact that so little of her income is being withheld:,,id=110413,00.html

    (My guess is that you’ve already reviewed the above pages on the IRS website given your screenshot, but just in case… ๐Ÿ™‚ )

    Also, if you look at line 6 of the W4, you can set a specific amount of money to be withheld on the W4 in addition to whatever calculations her employer uses:

    Girl Ninja had no way of knowing that she’d need to do this before receiving her first pay check, but now that she has received her first pay check it may be in your (plural) best interests to have her resubmit her W4 with some extra money being withheld.

    Best of luck sorting this out… It isn’t at all fun.


  5. Ninja, you should be happy that you are forced to pay such a high amount in taxes. The government must have income with which to send to the less fortunate (lazy bums) that sit in their government subsidized housing and churn out offspring as their primary source of income. Doesn’t that make you feel better?

    If you make enough money to pay taxes you are an evil rich person and it is your moral obligation to give money (you don’t have a choice) to the government because they know what to do with your money better than you do. Why are you so selfish?

    You also shouldn’t worry so much about your financial future, the government has you covered with a little thing called ‘Social Security’. There, that should put your mind at ease.

    [/end sarcastic rant]

  6. Sounds like she’s actually signed up for married/0 on her W-4.

    Calculation: 1228 gross * 24 paychecks (I guessed semi-monthly) gives a yearly taxable of 29472. After you take out the standard deduction for married (11400), you get 18072. The tax on that would be ~1860, which gives $77 per pay check.

    Remember, the way the tax is calculated on each check is based on what your end of year tax would be if THAT gross amount was your salary every pay period.

  7. I don’t know about you, but my employer’s online W-4 has an option for: Withhold this additional amount. Mine is set to $13, which by my calculations will leave us with a refund of $100. I set this after we get our first paychecks of the year.

    We are both Married/0.

  8. Quit yer bitchin’! You’re getting an interest-free short term loan for the government that you can judiciously put into a savings account making approximately 1% on the arbitrage. Just set up a separate account for this $, allocate to it accordingly, and profit.

  9. Does the IRS website have you factor in pre-tax items such as pre-tax retirement, pre-tax deductions such as health insurance or dental. That would lower you Gross income amount, thus lowering your tax amount. Did you owe $$ last year?

  10. I just want to make sure you know that the government isn’t in the business of giving interest free loans. If you owe $4,500 come tax time next year, they are going to charge you interest for “borrowing their money”. You’re better off paying it over the next few months.

    • Can you provide a source for this? I was curious about “what happens if I owe taxes” and I don’t see any info that says you have to pay interest for a tax liability of $X … So long as you pay what is due by April 15th, you’re O.K…. right?

    • The IRS web site is pretty confusing… o_O They make it sound like if you are self-employed, of course you have to pay estimated quarterly taxes. But if you’re a regular, salaried employee, then you just have to settle the amount owed by April 15th…

    • From Finco86 down below (this was my understanding of the process as well)

      “As long as you withhold 100% of last years taxes (or 90% of total taxes due), I donโ€™t think you will get any penelties and for sure no interest will be charged. Even if you miss this by a little (or even a lot), if you have the IRS determine the penalty, they often donโ€™t bother. ”


      • I’ll keep doing some research…. In the meantime, I guess I’ll beef up the trusty Emergency Fund just in case I have to write a check, too!

        I saw that paragraph about “as long as you withhold 100% of last years taxes” — it’s a little disconcerting because I got a raise, changed my filing status from single to married (which lowered my taxes substantially) AND started contributing more to my IRA. Looks like I won’t have as much tax withheld this year as last. :-\

        It may be a brutal lesson learned in a few months…

      • If it gives you a glimmer of hope, I estimated our 2011 tax return on June 30th and effectively just doubled all the numbers. Once I did this, the IRS calculator spit out that we’ll owe a couple of hundred bucks. Today when I did the calculator (by memory) it spat out $4400 — maybe we’re doing something wrong!

    • not true. One year i owed $3200, but the year before I got a $900 refund. Since my withholding rate was the same from one year to the next, I paid $0 interest and penalties. This was a result of taking too many deductions on my W4 as a newly wed right out of college (we each claimed married/jointly and only had 3-4 months of pay in one year with education credits, followed by 12 full months without those same credits).

    • Estimated taxes generally apply if you’re self-employed, but can pertain to salaried workers if withholding is insufficient. From the IRS:

      “If you receive salaries and wages, you can avoid having to pay estimated tax by asking your employer to withhold more tax from your earnings. To do this, file a new Form W-4 (PDF) with your employer. There is a special line on Form W-4 for you to enter the additional amount you want your employer to withhold.”

  11. Ach, that sucks! If I had to guess why it happened, I’d say it’s probably because yours and Girl Ninja’s incomes have been jumping around a lot? Like, she was out of work for the summer, and you were earning a bunch of overtime while in Europe, right? So it probably confused the tax witholdings, which aren’t really a science. I ran into this problem last year. I had worked the first part of the year on contract, and then was put on salary come September (as in, way paying no tax January – August), and then my withholdings assumed that the income I made from September – December was the only income I made all year, so they withheld almost no tax! It was unbelievably annoying. I had to hunt them down and demand they withhold EXTRA taxes to make sure i didn’t end up owing come tax time. (It did all work out OK.)

    I’m now totally on track with the withholding (I hope!), but I also file as both a salaried employee AND a freelancer, so I have a lot of deductions that help tip the scales in my favour. ๐Ÿ™‚ If I were you, I’d change your withholdings now and get caught up gradually, rather than making one lump payment, because that sounds horrible.

  12. I ran the gross amount of $1228 through the calculator at, and came up with $164 withholding for a biweekly and $237 for a weekly check. Something doesn’t look right here, and she should check with her employer. I even ran your post by the tax accountant in our office, and he had no explanation based on the data you provide. Maybe Melissa is correct if GN started on salary only just now.

    The ideal tax situation is to owe nothing and get nothing refunded on your return. So you might want to adjust your withholding (both of you) to get as close to even as possible. I would not make additional federal payments now. Remember also that because of your income, she’s paying a higher tax filing MFJ than she would if filing singly.

    I’d also recommend running a trial 2010 (yes) return based on your current income, extrapolating to the end of the year. The rates haven’t changed much since last year. How much you actually pay will depend on what credits (Educator Credit, etc.) and deductions you apply. Since you rent and you live in a state with no income tax, you’re unlikely to be able to itemize, unless you have very high charitable contributions.

  13. As long as you withhold 100% of last years taxes (or 90% of total taxes due), I don’t think you will get any penelties and for sure no interest will be charged. Even if you miss this by a little (or even a lot), if you have the IRS determine the penalty, they often don’t bother.

    I run into this too. My wife works for a school district and there were some months (paid once a month) where they only took out $76 in FITW. She had to call them up and get them to withhold an additional $150 a paycheck. In addition, I had to modify my withholding on both my 9 – 5 job and my Air Force Retirement check. It has really impacted our budget this year but, like you, I didn’t like the really big check I had to write in April. I want to write a check for less than $500 on April 15th. That way I get to keep the maximum amount possible in my check without getting a refund.

  14. Don’t use the estimator. Run your own numbers with the gross paychecks and the tax brackets. Subtract either your charitable giving + state income tax, or the standard deduction for the both of you.

  15. As a CPA, I deal with this all the time with clients…

    Check out IRS Publication 15. It has current withholding tables that employers use to determine how much tax to withhold based on how often you are paid and how many allowances you claim.

    Also, if you will have already paid as much federal tax as last year, you will not have any underpayment penalties if you choose to wait until April 15th to pay the remaining balance due.

  16. I wouldn’t worry too much. I use this every year around July/August and every year it is way off. It doesn’t assume credits properly( or end of the year political negotiations). The $4500 won’t include penalties and interest unless you owed more than $1000 when filing last year or you paid fewer total taxes for 2011than in 2010 (for the same tax situation – filing status, salary, dependents, etc).

    Just like a rebate from the IRS is an interest-free loan to Uncle Sam, owing money to the IRS at filing time WITHOUT interest and penalties is an interest-free loan to you. Only difference is the government can take its sweet time paying you back and you have a firm deadline of Apr 15.

    This late in the year, I’d throw it into a high-yield CD or money market and be able to write the check next spring without sweating it.

  17. My guess is the marriage penalty. Married-filing-jointly couples pay more taxes because the tax rate is higher for those beginning in the 25% bracket. Thus the disparity would be that you filled out single on your W4s instead of MFJ.

      • The “marriage penalty” probably does not apply to these two. she makes substantially less than he does (considering she has not worked a full year either). Usually if one spouse makes a lot less than the other, or if one spouse does not work, there is actually a marriage benefit. but nobody ever mentions that. also her withholding does not include his income, but using a “married” classification assumes her income is the only income. the tax brackets are not quite doubled for married people (that’s where people get the penalty idea from). so if you choose married, but have a spouse that works, the tax rate withheld is usually lower than what you would pay. that’s why the w-4 has such confusing instructions. single withholdings is always higher than married.

        • It actually pretty likely – like me, ninja is a federal worker of the same grade as I (you can compared salary+COLA to figure it out), and my DH is a teacher like GN. We hit the exact same scenario as he did – DH’s W4 somehow said single, and we got burned. So it’s actually likely.

          • the article you illustrated is frought with errors. simple example: it adds the two percentages of the FICA taxes so that instead of saying you are paying the same percentage on a higher salary it reads that you are paying a double percent level. The reality of these situations is that most people do not understand taxes. As a CPA, I have a pretty good understanding, althought not excellent, of taxes.

  18. Kim, I assumed somebody told you this rather than you looking up the withholding tables yourself. Just a few spot checks of the IRS tables would show that single withholding rates are always higher. Maybe ninja made an error in calculated what her total income for the year will be since she will have more than 1 w2?

    • No mistake was made. I calculated all the taxes she paid on her old job. All the taxes she will pay with her new job. And all of the taxes I’ve paid. The IRS calculator is pretty straightforward. I’m not necessarily shocked by the amount we will owe in TOTAL, but just the amount in which our withholding doesn’t satisfy. I would have though claiming “Single and no exemptions” since that bracket pays the most taxes.

      • This might be an error on your part. The calculator asks for the taxes paid to date and the taxes paid on the last check, it doesn’t ask for the taxes paid in the future. As in, if you entered the taxes you’ll estimate she’s going to pay until the end of the year, then you are in error. If that is not what happened, then maybe you’re going to owe come tax time.
        Also married people get a large tax deduction then single people. Single people with no kids and no house pay the most in tax.

  19. Her company made a mistake, no way in hell either of you should owe $4,500 for 2011, unless that is you are claiming some ungodly number.

    The years I made over 100k and did not own a house, I never had to pay out of pocket for taxes.

  20. There’s def something wrong w that FW calculation. What is her pay frequency? Was that check calced on monthly frequency but only half a months pay? That would be right.
    Check out paycheck city web site. And let us know when you get to the bottom of this mystery!!

  21. Ninja,

    Using my own withholding calculator, it appears that to match your numbers, Girl Ninja is paid semimonthly and is being withheld at Married 1. This could be sue to an error filling out the W-4 or someone in HR mistakenly put in the wrong information into the payroll system.

    For more information on Employer Withholding see IRS Pub 15 (

    For the underpayment penalty please reference IRS Pub 505 (

    In general you may owe a penalty if your withholding and estimated payments is less than the smaller of:
    90% of your 2010 tax liability
    100% of your 2011 tax liability
    if both you and Girl Ninja filed as single last year, your 2010 tax liability is the sum of both returns tax liability.

    As usual, there are exceptions to the rules:
    1. There is no penalty if:
    Your total tax is less than $1,000
    You had no tax liability last year
    2. There is no penalty if your total tax due is less than $1,000

    The penalty is 4% annual for each day your payments are late. With the pay as you go system, your tax payments are due quarterly (04/15/11, 06/15/11, 09/15/11, and 01/15/12). Unfortunately you can start making estimated tax payments and have paid your liability but still have a penalty due to the IRS using annualized income. In this case it would be assumed that both yours and Girl Ninja’s income was earned evenly throughout the year, and you missed estimated payments on that income.

    Feel free to contact me for more information at the email I provided in the post. I can provide the spreadsheet I used to back calculate the withholding.

    Disclaimer: I am a Tax Preparer for H&R Block, though this information is NOT being provided as part of my affiliation with H&R Block.

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