I am married with one child who is 1 and i have a house loan. i make about 25,000 a year. My wife does not work.
2006-10-16 08:26:26 · 5 answers · asked by brandon l 2 in Business & Finance ➔ Taxes ➔ United States
OK. Good question. Let's assume your child will be younger than 19 by the end of the year. Here is a close estimate of your 2006 tax return:
Income of $25,000. Standard deduction of $10,000 (more if doing a Sch. A). Exemptions of another $10,000. That leaves a taxable income of $5,000. Tax liability of $500 is totally wiped out with Child Tax Credit.
Your refund is everything you withheld plus $500 Additional Child Tax Credit. Plus, you are looking at a nice amount of Earned Income Credit. My friend, not only should you not withhold any Federal Income Tax, you will be getting a refund even if you withhold nothing all year. I can't speak for your state (you didn't give us that information), but you could claim anything you want on your W-4 and still get a refund. If your child is 19 or older, you won't get the Child Tax Credit, but you could still get the EIC if he/she is younger then 24 and a full time student.
Check you last year's tax return. Did you have any tax liability? If you did not, and if you don't expect to have one for 2006, then claim "EXEMPT" on your W-4. Or, simply choose Married 6. You are in great tax shape.
Now about putting that wife to work......
2006-10-16 18:05:52 · answer #1 · answered by TaxMan 5 · 1⤊ 0⤋
Well you have three exemptions to start with (self wife and child, but the child is the only one who goes in the dependents section) and if you file jointly with your wife you have a Standard Deduction of $12,000 (more if you can itemize - I do not know if you can because you haven't given enough info - don't forget property taxes as well). So you have 21,900 coming off your gross that leaves you with $3,100 taxable and a tax bill of $310. Knock off Child Tax Credit and you are into a refund. You may qualify for EIC so that will increase the refund too.
And no, you are NOT Head of Household because you are married (unless your wife left you before Jan 1st of course)
2006-10-16 15:32:34 · answer #2 · answered by skip 6 · 2⤊ 0⤋
Ignoring the home loan, you would probably claim 3 exemptions on your W-4. Depending on the amount of home interest, property taxes, and other itemized deductions, you can probably add to that. The link below is a calculator the IRS provides to help estimate the best number of exemptions to claim.
2006-10-16 20:11:08 · answer #3 · answered by STEVEN F 7 · 0⤊ 0⤋
Sound like you are Head of Household with 2 dependants from an IRS perspective
2006-10-16 15:30:00 · answer #4 · answered by Bama 5 · 0⤊ 3⤋
that wife of yours needs to get herself a part time job to help you out
2006-10-16 16:52:39 · answer #5 · answered by jinenglish68 5 · 0⤊ 1⤋