Author Topic: Best paycheck/withholding calculator(s)? (Read 3201 times)

Thegoblinchief

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Best paycheck/withholding calculator(s)?
« on: July 10, 2015, 07:32:41 AM »
I've tried googling a few but what do Mustachians recommend for playing with the numbers in regards to take home pay and AGI after tweaking HSA, 401(k), and extra voluntary deductions?

Thanks in advance! We're starting to have the "problem" of making enough money that tax optimization shares at least some priority with prepayment of debt with after-tax dollars.
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MDM

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Re: Best paycheck/withholding calculator(s)?
« Reply #1 on: July 10, 2015, 10:06:08 AM »
From a PM discussion Cheddar Stacker and I had for his tax guide post:

Some suggestions that have been made in various posts for tax planning "what-if?"s:
https://irs.gov/Individuals/IRS-Withholding-Calculator or
http://bankrate.com/calculators/tax-planning/1040-form-tax-calculator.aspx or
https://turbotax.intuit.com/tax-tools/calculators/taxcaster/ or
the MMM case study spreadsheet

Looking closer at all four:
- The IRS withholding calculator isn't bad, but requires you to know how much you will get in credits.
- bankrate appears to calculate the child tax credit and the non-refundable American Opportunity credit, but relies on user input of the credit amount for for all others (and is still using 2014 tables)
- taxcaster has significant holes for the usual MMM audience: taxcaster does not calculate the saver's credit, and may not handle passive income (from rentals) well.
- The spreadsheet does the saver's, child tax, child/dependent care, the American Opportunity education, and earned income credits.

One also has the options of
- using the previous year's full blown version of TaxAct, TurboTax, etc. Both TaxAct and TurboTax have "what if...?" capability for future tax years. E.g., see https://bogleheads.org/forum/viewtopic.php?f=2&t=225670#p3492987.
- developing a personalized tax spreadsheet that covers one's own situation very well, even if it would not apply well to others. E.g., see /ask-a-mustachian/turbo-tax-vs-cpa/msg539186/#msg539186

ETA: spreadsheet now does tax calculations for SS recipients
ETA2: replace paycheckcity with the IRS calculator
ETA3: The case study spreadsheet does calculate the child/dependent care credit and the American Opportunity education credit.
ETA4: Note TaxAct's and TurboTax's "what if?" capability for future years.
« Last Edit: September 07, 2017, 01:27:12 PM by MDM »

Thegoblinchief

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Re: Best paycheck/withholding calculator(s)?
« Reply #2 on: July 10, 2015, 10:36:08 AM »
Thanks, MDM. I think the MMM spreadsheet should do the trick for now.
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seattlecyclone

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Re: Best paycheck/withholding calculator(s)?
« Reply #3 on: July 10, 2015, 11:12:02 AM »
- paycheckcity probably shouldn't be in the above list at all, as it does very little beyond calculating federal, state, and FICA withholding based on gross income and filing status.

I've used this before. The form has a section for you to put in any payroll deductions, and specify whether they're pre-tax, post-tax, pre-income tax but post-FICA, etc. Its results have always been within a few cents of what my actual paycheck has shown for the same deductions. I recommend it.
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Thegoblinchief

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Re: Best paycheck/withholding calculator(s)?
« Reply #4 on: July 10, 2015, 11:15:56 AM »
I also ran through the IRS withholding calculator online. With current salary and changes, we shouldn't owe any federal tax, so I will increase our allowances to 13 on her W-4 (that's what the IRS output gave me).

Also caught that, while we recently increased our HSA contribution from $75/check to $125/check, for whatever reason they were still only deducting $75 under the pre-tax section. Weird. Asked my wife to check on that.
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Gen Y Finance Journey

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MDM

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Re: Best paycheck/withholding calculator(s)?
« Reply #6 on: July 10, 2015, 03:01:17 PM »
An observation: two related but different topics are being discussed. There is
1) adjusting paycheck withholding to achieve a desired net tax due to the IRS (and state/local, as applicable) on April 15 of the next year, and
2) adjusting financial strategy (traditional vs. Roth, use HSA or not, etc.) to achieve maximum spendable income over time.

Topic #1 is what the thread subject describes. Topic #2 is what the original post ("tax optimization") implies.

freeedom

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Re: Best paycheck/withholding calculator(s)?
« Reply #7 on: July 12, 2015, 03:49:35 PM »
This one is the best:
http://adp.com/tools-and-resources/calculators-and-tools/payroll-calculators/salary-paycheck-calculator.aspx

It includes city taxes, and you can put your own withholding so you can an exact dollar figure for a paycheck.