What should I change my tax withholdings to now that I'm a home owner?

Question

My boyfriend and I own as joint tenants (not married). I want to make sure I'm taking home as much take home pay as allowed.

Answer 1

The IRS has a withholding calculator:

http://www.irs.gov/individuals/article/0,,id=96196,00.html

Answer 2

This question is a bit more difficult to answer than you might think. Adjusting your withholding depends upon who is taking the deduction for mortgage interest and real estate taxes. If you're the one whose social security number will be listed on the Form 1098 (Statement of Mortgage Interest), you might be able to switch from S-0 to S-1 (the IRS withholding calculator the other poster mentioned will help with that). If you're not the person whose social security number will be on that Form 1098, you probably don't want to touch your current withholding because, according to the IRS, your tax situation hasn't really changed just because you're living in the house (basically no different than if you were living at your parents' house).

Answer 3

Here's the thing, you will only be able to deduct 1/2 the interest and 1/2 the real estate taxes on your return. If you just recently purchased it I would only increase your exemptions by 1(of course if you had been getting tax refunds over $500 to $600 you can probably do Single 2 but again this hinges on whether you will be able to file itemized. I recommend you go to www.irs.gov, select W-4 and go through step by step to determine your exemption withholding.

Answer 4

Drop into a preparers tax office, they will ask lots of questions about your finances and arrive at your tax liability before and after the house.

You can change the W4 at work every month if you wish which will alter how much money comes out of your check for fed. tax.

Bottom line is there is no penalty if by April 15th you have paid 90% of this years tax or 100% of last years tax.