Too Much Money... taken out of W2

I have been overpaying about $1000 a month for the last 3 years. Even trying to change my exemptions from current Married/4 to Married/9 only changes the overpayment by about $100.

How can I quit paying too much each month?

Dadnatron,

This is a nice problem to have....

On your W-4, Withholding Allowance Certificate, line 6, you can put in a dollar amount. This would be added to the amount that should be withheld from the other lines for withholding exemptions. File the new W-4 with your payroll dept.

In your case you want an extra $12,000 withheld, so divide $12,000 by the number of paydays you have in the year. This is the amount to put on line 6.

Claim more exemptions. If you are entitled to 20 exemptions, take them.

Each exemption is supposed to equal about $3000 in deductions somewhere on your tax return.

So if you are in the 28% tax bracket, each extra exemption will decrease your yearly withholding by about $840, or on a monthly basis, that would be about $70.

I don't understand how increasing your exemptions from 4 to 9 only decreased your monthly withholding by $100. It seems that 5 additional exemptions should decrease your payroll taxes withheld by at least several hundred dollars a month. Perhaps your payroll department didn't calculate things correctly, or perhaps some other important detail is missing from your initial question.

I agree -- take more exemptions. Take 20, even if you don't have 20 kids. It doesn't matter, UNLESS they under-withhold. And they aren't. I agree that someone in Payroll may not be doing the math accurately. When I changed a single withholding, it amounted to about $70 a month.