Has any one done this or heard of it?
MEA Calculation
This is for me, not every one would be the same so don't just do this with out consulting with some one who knows.
1. Increase FEDERAL EXEMPTIONS from 0 to 4 total. DO NOT CHANGE STATE EXEMPTIONS. DO not change MARRIED status.
2. Increase TSP contributions from 12% to 19%.
3. Net loss on bi-weekly pay is $ 12.62 +/- a few dollars.
According to the one that told me about this based on my scenario of pay and filing status I can increase my TSP by 7% just by changing my exemptions and only have a very minimal loss of pay.
Has any one else done this?
Pill
I'm with KevinD on this one. Changing your withholdings will effect how much you owe or the amount of your tax return at the end of the year. I can not see how you can generically correlate the formula to fit everyone. Some have children, some don't. Some have a ton of deductions, some don't.
I'm not sure how to comment except to be very careful.
Socrates: "Democracy, which is a charming form of government, full of variety and disorder, and dispensing a sort of equality to equals and unequaled alike."
Good information you have me thinking and looking at my LES.
Socrates: "Democracy, which is a charming form of government, full of variety and disorder, and dispensing a sort of equality to equals and unequaled alike."
I calculated the difference in takehome between 5 and 10% TSP earlier this year, and did the exemption increase calculations last year holding 5% TSP steady. You can do it too, using W2 withholding calculation form. We have this form on agency personal finance website, you probably do too. It took me a bit of time to work through the process figuring out how to do it, but its doable.
"life can only be understood backwards, but it must be lived forwards" - soren kierkegaard
I always use the maximum number of exemptions because I'd rather let my money work for me, instead of letting the government make interest off my money.
From TX with no state tax. I have 4 Dependents on a single income pay grade of E5 which means I don't pay income taxes. Sometimes being poor has it's advantages...
Thanks guys, I moved the post to Taxes. I don't think I can move others comments, maybe a moderator can.
Pill
1. How will this effect my end of year return?
Increasing Fed withholdings decreases State & Fed tax withheld. These monies that increase your net pay are then put into TSP PRE-TAX, thus reducing your taxable wages for the year. Withholdings are “units of measure” and not necessarily children, Wife, etc.
At the end of the year, the IRS looks to a W-2 for (2) items:
1. Taxable income for the year
2. Taxes withheld
Since each exemption represents X amount of dollars and cents (usually not an even percentage of Base pay), I round up to the next highest percentage to TSP. This is why you see a loss of net pay. You never want to net more pay….you want to take home the same or less.
Pill
S&P500 (C Fund) (delayed) (Stockcharts.com Real-time) |
DWCPF (S Fund) (delayed) (Stockcharts.com Real-time) |
EFA (I Fund) (delayed) (Stockcharts.com Real-time) |
BND (F Fund) (delayed) (Stockcharts.com Real-time) |
||
Yahoo Finance Realtime TSP Fund Tracking Index Quotes |
Bookmarks