Hello,
I have used Exemptions of 5 and 4 for Fed and State from my paycheck. That takes away 23% of my paycheck to taxes (all taxes).

I used the same numbers for my wife's paycheck and it takes out only 12% from her paycheck.

My question is why do we see so much of a difference in withholding between the two paychecks with the same exemptions?

This caused us to withhold less money and now we have to pay a lot more to the IRS this year.

Paycheck size is a factor in those calculations.

Several factors go into calculating your total tax. Social Security and Medicare are standard rates of 6.2% and 1.45%, but federal income tax is based on your W4. The covered wages for federal income tax is taxed on a upward scale. For example $0 to $100 is taxed at 0% then $101 to $450 is taxed at 10% then $451 to $1550 is taxed at 15%. The brackets are 0%, 10%, 15%, 25%, 28%, 33%, 35% and 39.6%. The dollar amounts for each bracket are also based on how you are paid (weekly, biweekly, monthly, etc.) and what withholding status you selected on your W4 (single, married, or exempt). Plus some of your wages are exempt from federal income tax such as pretax medical premiums, spending accounts (dependent care and hsa flex spending) and some mandatory and optional retirement.

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Paycheck size is a factor in those calculations.

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Thanks for your reply. I think that is strange and makes it hard to judge how much money will be taken out.

It is trying to approximate taxes for a single income individual. That is part of the problem.

Yep. They generally don't work for dual income people. Need to use the additional withholding calcs.

does her W4 say "Married" or "Married - withhold at single rate"? If the former, that could explain a large part of the underwithholding. The withholding tables still assume there is only one earner in a marriage, which is insane.

My wife intuitively ticked the "Married" box our first year and we had an unpleasant tax surprise that year.

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does her W4 say "Married" or "Married - withhold at single rate"? If the former, that could explain a large part of the underwithholding. The withholding tables still assume there is only one earner in a marriage, which is insane.

My wife intuitively ticked the "Married" box our first year and we had an unpleasant tax surprise that year.

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There are just 4 options in Paylocity. Single, Married, Divorced and Widowed. So "Married" is selected.

From what I read here, it does seem like this is a problem needing folks to monitor closely.

My solution for now is to keep my wife withholding as it is and change mine so take out some additional fixed amount and then I will reduce the Fed number on mine so that our combined taxes withheld equals about 23-25%.

Check out IRS Publication 15 to understand how paycheck withholdings work. Start on page 42 to read about the withholding tables.

Each withholding allowance is worth $4,050 per year. That means that for each withholding you claim, $4,050 is being deducted from your taxable income per year to calculate your payroll tax. More withholdings mean that you pay fewer taxes and get to take home more money each pay period.

I took the Publication 15 tax tables and made a spreadsheet to estimate how much tax my wife and I would be paying out of our paychecks during the year. I then calculated our taxable income (minus deductions and exemptions) and our estimated yearly tax bill. Once you have both sides of the equation, you can adjust withholdings to get your payroll tax as close to the estimated tax owed as possible.

There's also an IRS calculator which is supposed to do this for you, but it sucks.

The quick and dirty test is take the highest income earner and see what the tax bracket that income falls into. Your spouses income then immediately starts there, even if they make a paultry sum.

Do the worksheet, it saves you a big old red at the end of the year. Sometimes people realize that side crap job to make extra money isn't worth **** all. Sometimes you lose deductions and pay more taxes.

People getting into low six figures and up get a wake up call to taxes. Sucks.