The standard tax table amounts for federal withholding are significantly higher in to 2011 than 2010. However, thanks to the 2010 Tax Relief Act, workers are paying less into the FICA payroll tax. Essentially taxpayers who use the standard withholding tables end up withholding well more than they may need to because the tax rates did not change.
IRS Tax Tables 2010 vs. 2011
|
2010
|
2011
|
Pay Period Difference
|
Annualized Difference
|
|
|
Single (0 Exemptions)
|
||||
|
$1,200/week
|
$209.10
|
$217.00
|
$7.90
|
$410.80
|
|
$2,000/Semi-Monthly
|
$302.90
|
$339.00
|
$36.10
|
$866.40
|
|
$5,000/Monthly
|
$855.75
|
$888.00
|
$32.25
|
$387.00
|
|
Married (0 Exemptions)
|
||||
|
$1,200/week
|
$130.05
|
$142.00
|
$11.95
|
$621.40
|
|
$2,000/Semi-Monthly
|
$191.65
|
$217.00
|
$25.35
|
$608.40
|
|
$5,000/Monthly
|
$533.30
|
$583.00
|
$49.70
|
$596.40
|
For example using the standard withholding tables:
- If you are a single taxpayer and earn $1,200 a week, you are withholding $7.90 more each pay period than you need to in order to meet your tax liability. This adds up to more than $410 a year.
- If you are married and earning $1,200 a week, you are withholding $11.95 more a pay period, adding up to more than $620 a year.
- If you are due a refund, you have let the government hold your money without paying you interest for nearly a year.
You can avoid this by talking with a Tax Consultant or C.P.A.
- We suggest our clients have tax projections calculated twice a year to ensure they are meeting 90% of their previous year’s tax liability.
- You can discuss with your C.P.A. how best to adjust your W-4 Employee’s Withholding Allowance Certificate so you do not withhold more than required.
Disclosures
This article is meant to provide valuable background information on particular investments, NOT a recommendation to buy. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.
