How many exemptions should I claim on my W-4?

Question

I'm unmarried with a newborn. I have daycare expenses and qualify for the child care credit. I work full time, but was on unemployment where no taxes were taken out of my paycheck for 5 months. Before then I worked for 6 weeks and was claiming 0 and had an additional $15 taken out each week (in anticipation of my upcoming unemployment).

I'm unmarried with a newborn. I have daycare expenses and qualify for the child care credit. I work full time, but was on unemployment where no taxes were taken out of my paycheck for 5 months. Before then I worked for 6 weeks and was claiming 0 and had an additional $15 taken out each week (in anticipation of my upcoming unemployment). I anticipate my income this year to be approximately 11,000 with an additional 7,000 in unemployment benefits.

Answer 1

My head is dizzy with the plethora of answers. I've done hundreds of tax returns for single mothers who earn less than $27,000 per year and who claim a child. If you fall into this category, then chances are you will end up with no tax liability or even with a negative tax liability. Translation: chances are you will get back all the federal taxes that were withheld PLUS some more. Why, Earned Income Credits and Child Tax Credits. You can claim a very high number of exemptions (Single 9) on your W-4 and even though you won't have any federal taxes withheld, you will still get a refund.

If your income is a bit higher, go with Single 3. If it is 6 figures or more, go with Single 2. Don't listen to people that give a blanket statement to claim a very small number. Sure, you'll get an excessively large refund, but your weekly paycheck will be unnecessarily small. Most single mothers I know need money NOW, not in February.

One huge caveat...can anyone claim you as a dependent on their return? I didn't say "Will they"; I asked "Can they". If they can, then you will NOT get to claim your child as a dependent and you will NOT get the Child Tax Credit and you will NOT get the Earned Income Credit and you will NOT get the daycare credit....well, you get the picture. If you paid at least half of your own support for the year, you are totally safe. If you did not, then the person that did may have the right to claim you. If you are not sure, PLEASE see a tax professional. The repercussions could be huge. Since your income is above $3300, the only way someone can claim you is if you are their "Qualifying Child". Be careful if you lived with a relative for at least 6 months (mother, grandmother, sister, brother) AND if you did NOT pay at least half of your own support.

Finally, avoid the Advance Earned Income Credit (form W-5) alltogether. This is when they pay you for EIC throughout the year. What happens when, at tax time, you realize you don't qualify for the EIC for some stupid reason? Now, you have until April 15th to pay it all back. Sound like fun? I didn't think so. Congress should repeal that stupid option. I can't tell you how many people get caught in that trap every year.

Answer 2

The question is do you want a huge refund next April or a smaller refund by increasing your take home pay.

The W-4 has a worksheet which can be used to estimate the number of exemptions given the daycare expenses and child care credit. {EDIT} With an estimated income of $18,000 (includes the unemployment benefits) and 3 months left in the year - just claim yourself and the baby and forget about the worksheet. Sorry.... {END OF EDIT}

I've known people receiving $3,500 refunds with child care credit and working full time. If you want the government to keep your money interest free - that's fine. If you want a smaller refund and more money with each check - then increase your exemptions by at least 2 or 3 (meaning 4 or 5 vs. 2)

Answer 3

That depends on how much you want to get back at the end of the year. I would not claim more than two. How ever if you are eligible for the earned income credit and do not want to Waite until the end of the year you can fill out a form w-5 and you will get some of the credit now and some at the end of the year. Go to IRS.GOV and check it out for your self. Good luck to you!

Answer 4

On your W-4, you should claim one exemption for every $2000 in deductions that you plan to have. Since you will file as head of household, you will have $13,800 in deductions if you do not itemize. Therefore, you can claim 7 exemptions on your W-4.

However, this does not take into account that you get the child credit, the child care credit, or the possibility of earned income credit.

Answer 5

Please, please do not fill out those worksheets. Those are extremely scary and always give most people way too many exemptions. End result: they end up owing at tax time. I would claim, at the most, two exemptions. You didn't say what you income was. do you qualify for earned income credit? That will help out. Claiming two will lower your refund for this year but will give you more money on each paycheck.

Answer 6

If you want a bigger refund go with 0. If you need more money now then go for 1 or 2. If someone else (the person you live with) can claim you claim 0.

Answer 7

Head of househole, you'll get the added benefits with having the baby when you file. I would keep it at zero because you'll get a hefty refund at the end of the year and you're already used to it being that rate, and I would just remove the extra 15 you contribute, believe me, you won't need it.

Answer 8

Is your AGI for 2006 around 13,800.00 or less, if so then you have no taxable income. If it is over that amount then on your W4 line 3 should be single, line 5 should be -0- . line 6 is correct about $15.00.

Please be aware you may also have to withold for State income tax if you have state tax.

Answer 9

Claim yourself AND your child (for a total of 2). Also claim the childcare credit.

Always claim yourself as an exemption; a lot of people miss this one.

Answer 10

by claiming 0 you have a better chance of a refund