I know some of you have to be smart with TAX's so I have a question.

When I started working at my current employer 6 years ago I filled out my employment papers and put 0 on my tax form. This has resulted in almost a 2K tax return each year. Now this virtual bonus is nice each year but I think id rather have that money come to me in each check I get. This way it can build some interest with the rest of my money instead of funding uncle sam.

So if I change my filing to a 1 are there any cons to this? I realize I may have to pay in a few dollars.

Thanks guys

 

If you put a 1 you will get an even larger tax refund because they will take more out of your check. Why are you getting so much money back claiming 0?

 

:ibtaudit:

 

Oh and moved to M&I

 

Well as you can see I know little about taxes, so maybe I have those numbers backwards I use whichever ones currently gives me back the more money

 

Yeah the more exemptions you claim the higher your refund will be.

 

Filling out your W-4 with a 1 instead of a zero will actually decrease the amount that your employer will withhold from your wages and will result in a smaller refund. The amount of the change will depend on your salary amount.

The misconception in this thread seems to relate to the amound of exemptions taken on your tax return, not on the W-4, which you fill out for your employer.

My suggestion would be to talk with your employer and ask them to give you an estimate of the change that would occur when when changing to 1 exemption or even 2 on your w-4.

The only possible cons to changing your withholding amount would be if you changed it to a level where you were not having enough withheld to cover either 100% of your tax due for the current tax year, or 90% of your prior year tax liability...this is the line on your tax return that shows the total tax due before taking into consideration withholdings, etc. If one of these scenarios is not met with current withholdings, you can be subject to interest and penalties for underpayment of estimated taxes.

 

^^

You can do rough estimates by checking the tax tables on www.irs.gov. Use your AGI (adjusted gross income) and see where you fall. Then see what happens when you claim additional deductions on your W-2 - taking less money out of your checks and reducing your refund.

While I agree that you want to get this as close to zero as possible, I'd err on the small refund side rather than a small tax bill, but that's just me

BTW, what the hell happened to Rev?

 

Thanks for the advice guys, I think ill check in with my HR dept.

Isn't this around time when REV was supposed to be going to the east coast?

 

You are correct, scratch my first response. You think I would have known this since I put 15 on mine

 

I changed mine to 3 this past year. I was getting back over 6k on my federal returns. I should just about break even or even get a bit back.

 

i claimed zero when i was younger and i had to pay at tax time.

right now i claim 7 on my w-4 and get nothing taken out of my check. my estimated return this year is between $3 - 4 K.

check this thread https://acurazine.com/forums/money-investing-17/tax-questions-375355/ there's lots of good advice there.


btw, i think rev is banned. not sure why, though

 

How do you get money back if nothing is taken out of your check in the first place?

I saw the "banned" barnding on his username, but don't know anything about it.

 

not sure how the gov figures it out, but i can't complain as of yet. read your w-4. you are prolly entitled to more exemptions than you think. there is a seperate page with it that has more exemptions on it.

 

I could see this if you were making about $20K a year...Do you own a home?

 

I'm thoroughly confuzzled. I guess my main question is what is that form (number?) that you always fill out when you start a new job? Isn't the number you put down how many exemptions you want to "claim"? So i'm a single guy and I put down 1, so i "should" be getting money back since the government has been taking out more than they should right? which is fine...that was my intention.

Coincidentally, I'm starting at a new employer in a couple of weeks. Should I still claim 1 or 2...?

 

http://www.irs.gov/pub/irs-pdf/fw4.pdf


I am a single father, and because of that I get more exemptions. With an income of less than $58K, I get to put a 2 on line g. 2007 was the first year I claimed this many exemptions. For 2008, I am only going to claim 3. I am paranoid claiming 7 will come back to bite me later.

 

When you said you meant that figuratively, right? They still take taxes out of your paycheck, right? If that is the case, then I understand, but if you meant that they literally don't take a dime out of your paycheck for federal taxes, then I am baffled.

 

You have it wrong. The more exemptions you have, less money is withhold by the federal government each paycheck, therefore you get more money upfront and LESS refund come April. OTOH, too many exemptions -and depending on your specific situation- you may end up owing taxes..

 

Okay, that makes sense. Thanks! hmm...now i'm questioning whether I put 0 or 1.......

 

they take out Fed MED/EE, Fed OASDI/EE, and WI takes money too. no FICA is taken out.
not sure exactly what those Fed ones are. medicare and SS, maybe?

 

The Fed Med/EE is medicare withholding, which all w-2 wages are subject to unless you have deductions for insurance, etc. that run through an employer sponsored (IRS Section 125) cafeteria plan, which makes certain items non taxable for all tax purposes. The medicare rate is 1.45% of your taxable wages.

The Fed OASDI/EE is the Social Security taxes that they are withholding from your paycheck. Similar to medicare withholding above, except there is an annual maximum, indexed annually, which for 2008 will be $102,000, I believe. The percentage withheld is 6.2%.

Both of these items discussed above are collectively considered FICA taxes. The reason that there is an EE before them is because that is the employee withholding. Your employer is required to make matching contributions when paying these items to the government, so if your paystub also has a line for ER items related to the above mentioned types of taxes, that is their matching contribution to the medicare and social security funds.

It sounds like you have no federal withholding. As you said, since you are a single father, you have a few potential "refundable credits" that could cause you to get money back on your tax return, even if you do not have any withholdings. These credits could be the Earned Income Tax Credit, and the Child Tax Credit. Depending on your income level, you may qualify for one or both of these items. I don't remember the income levels for EITC off the top of my head.

Hope this helps!

 

ya, that's what i meant. no fed withholding taken out. i didn't know FICA was a conglomerate of all. interesting. thanks.