Comments on: Payroll Tax Exemptions ($10 Question)

By: Scott

Scott — Mon, 03 Dec 2007 17:01:11 +0000

You can claim as many dependants as you want. Just beware that next April when it is time to do your taxes, you better have some hefty write-offs to offset any “extra” dependents you may have claimed during the year.

By: pfadvice

pfadvice — Mon, 03 Dec 2007 02:56:29 +0000

Thank you for taking the time to comment. I decided to offer all three of you the $10 prize – an email has been sent to each of you

By: reza

reza — Fri, 30 Nov 2007 18:29:49 +0000

The IRS has a calculator for this very purpose. Don’t say I never gave you nuthin’.
http://www.irs.gov/individuals/article/0,,id=96196,00.html

By: melwrc

melwrc — Fri, 30 Nov 2007 14:24:53 +0000

There is an additional worksheet that goes with the W4 that takes into account your anticipated itemized exemptions. For your mortgage interest and taxes, last year’s records should be a close estimate assuming you didn’t move this year.

This being the end of the year, I’d recommend estimating your deductions that you’ll be taking for your 2007 taxes this month. Then you can use the W4 worksheet and submit it to payroll for January 1. Do not overestimate your exemptions just to increase your take home pay. You could get popped with penalties doing that.

By: Minimum Wage

Minimum Wage — Fri, 30 Nov 2007 13:31:49 +0000

You can certainly take the number of exemptions you’re going to take on your tax return, e.g. if you are single with two kids, you can claim 3 exemptions for tax withholding.

When I was young and had two jobs, I took 2 exemptions for withholding. Because a second job pushed many workers into a higher tax bracket, they were allowed the extra withholding exemption to avoid being overwithheld.

Since your W-4 form stays with your employer, the IRS (usually) doesn’t much care how many withholding exemptions you use.

BUT you do have to be careful. There is a lot of fraud involving Earned Income Tax Credit (workers falsely claim nonexistent kids to reduce their withholding and to get the tax credit), so the IRS does look closer at these workers. Also, you have to have paid in least 100 percent of the tax you paid last year, OR 90 percent of the tax you owe for this year (on your (next) April 15 tax return), or else you will also owe a tax penalty for not paying enough during the year.