How To Fill Out W4 To Minimize Tax Liabilities - YouTube

Today I'm talking about.

If you're a business owner and you have a business,

there's not a sole proprietorship. So, in other words you're a corporation an

s-corp. You might pay yourself a salary, in other words you're on payroll. If

you're an active member of your business. When you put yourself in payroll,

how do you know how much so withhold? And not only that, you might just have a

part-time business but you might also have a job to go with your business. How

do you know how to fill your w-4? I'm sure most of you have seen this

form. So today, we're going to go through and talk about how to fill this form so

that way you're withholding the right amount and that you don't owe at the end

of the year. So, to complete the w-4 you start by filling out your name. So, I'm

going to put my name, Evelyn. Your last name, Ivy. You put your social security number.

I'll just put xxx. You put your address, one two three street, you know city, zip

code. And now, if you're single, you put single, you click single. If you're married, you

click I'm married. If you're married but we hold at higher singular rate you

click that so what that does is even though you're married it will withhold

you as a single rate. And then then here is the part that is really for most

people know how to fill out that top part but where people get confused is is

the page is a four page form so it's like when you progress down the page

it's like what does this even mean it's uncle line-by-line now so it makes it

after you've done the basic information that everybody knows is you have to

figure out total number of allowances you're claiming so now let's figure out

how to figure out that amount what the total number of allowances should be so

we're gonna fill this out with the assumption that the person filling this

is a business owner who's married filing jointly and has one child so we start

this by entry one for yourself and sure one for married filing jointly

now this instructions are a little bit confusing because

there are some things are exclusive each other in other words when you're warned

you can't be the other so for like cnt1 if you found a head of household well

that would be a zero because they're talking about filing statuses so you

can't be a head of household and married filing jointly at the same time so that

doesn't actually apply to you then here here is another exclusive one so if

you're married filing jointly you cannot be single or married filing separately

so that part does not apply to you so you don't enter one full line Z for that

but however the second line could possibly apply to you you're married

filing jointly have only one job and your spouse just not work either in our

case this doesn't apply because you have a business so that is more than one job

I mean you know you have any business and then you have a job or or you have

the job you'll pin yourself in your business and then you have profit so

that would apply to you in this case now let's look at this your wages from a

second job or your spouse's job are $1,500 or less so if you're expecting

your spouse or your profits to be less than 1500 or you know your wages from a

second job or 1500 or less you can enter one well in this case we're going to

make the assumption that we do plan to make some money so we'll just leave that

part alone now let's move on to child tax credit so this remember this person

an example this person had one child so the tax there's a threshold where you

won't be able to get the child tax credit so that's what this threshold are

so the higher your income the more the credit is phased out so the first phase

out range is when your total income is less than seven one thousand two hundred

and one if you're single or head of household or 103 thousand 351 if you're

married filing jointly that's your filing together with your spouse so if

you're below this threshold you get the full credit and if if you're gonna be

below this threshold then you enter for now keep in mind mothers are talking

about total income so total income will be your wages it will be your spouse's

wages it will be profits from your business it will be your

interest income any income you have from any source you have to add all that

income together to get your total income so for example if yours if you make

$2,000 as wages from your business you make $2,000 as profit so that's 4000

your spouse makes 2,000 that's 6,000 you have some rentals that bring in 1000 so

that'll be 7000 so your total income is composite of everything so if your total

income when you add them all together is less than seventy one thousand two

hundred and one you enter four here however if when you add that total

income together it's greater than seventy one thousand two hundred and one

but it's less than one seven nine thousand fifty if you're single a head

of household a 103 thousand 351 to 325 850 if you're married filing jointly

well you're earning your child tax credit will be phased out so at that

point you enter a two - total income would be greater than the bad but less

than two hundred thousand or four hundred thousand which is the maximum

threshold for the child - Grady two hundred thousand for single and head of

household in there and four hundred thousand dollars for married filing

jointly if this is you enter one if you're greater than 200,000 and 400,000

we add up all your income you don't get the child tax credit so you enter zero

so in this case we'll just make the assumption that we're going to be with

them the first range where nothing is phased out so we just enter poor there

previously we talked about the child tax credit under 17 what happens if you have

your child's over 17 is in college and you take care of a parent so in this

case we have credit for the dependents so they've taken out the personal

exemption was in that place we have a credit for the defense we get five

hundred dollars per person per dependant on you that you claim your tax return so

just like we did for the child tax credit

there are phase-out ranges so in this case if you make less than seventy one

thousand two hundred and one for a single head of household or you make one

hundred and three thousand three fifty one for married filing jointly you enter

one for each dependent now if your income is below be above that Thresher

but less than one seven 9050 for a single head of household of 345 854 very

finely 20 jointly and 2 1 for every other dependent so what that means is if

you have if you have two or three dependents you enter one if you have one

you enter zero if you have four you enter two so it's every other remember 1

0 2 or 3 1 4 2 5 2 6 3 so that's how that goes but if your total income is

higher than 1 7 9050 if you are single head of household or 345 853 marathon

shortly enter 0 so let's just make the assumption we take care of a parent and

we said we're in this first threshold so we enter 1 for that parent then the next

thing we do is we add up all the amount so we have 1 2 6 7 so we enter the total

of lines a through G on H oh by the way I skip line G other credits because

mostly for most of those are not significant right so I mean you could

have education credit or things like that which you could claim remember the

point of this is to withhold as much that is legally possible so at the end

of the year you don't get much of a refund or you don't owe taxes so it's

either you get it now or you pay or get it later so it's not like you know this

is money that it's not free money so basically it's like we're trying to make

sure we get our money during the year so at the end of the year

we're not owing or not pain so the other credits I kind of like to leave that as

a leeway but if you want to really claim everything that you want you have to

pull up publication 505 and fill out the worksheets from 1 to 6 to see what else

you might qualify for what I say these are estimations you don't want to grab

every single thing you can because what if something changes I mean at least if

you still have that credit that will help you work things out so like we have

this 7 if we don't have any if you don't have other deductions or we don't

have a spouse a second income but we don't have a business or anything this

is where we stop so this amount will go up here to the first page again and we

enter that amount on line five but however you as a business owner you have

to actually go further so that will be the discussion of the next video so stay

tuned like what you see go ahead and click the subscribe button on the very

bottom of this video I look forward to seeing you in future videos