Should I claim dependents? I currently claim 0 but...?

Question

My husband and I both work full time. We have 2 children. Currently, both of us claim 0 dependents. I thought I read somewhere that the person who makes the largest salary should claim the least amount of dependents possible, and the one with the lowest should claim as many as possible. If I do that, it will cover the cost of my family's insurance. Should we still be covered tax wise? I don't want to owe taxes when it's all said and done.

Answer 1

I typically think that a good general rule is for the higher salary to claim married 2, and the lesser salary to claim zero. Then (assuming you don't have alot of other income) you increase the larger earner's take home but still get something back.

If you do it the reverse (as you propose), leaving the higher salary at zero & increase the lower salary you will probably be ok.

Do it now since it's already Oct. & it won't effect your tax return for this year much since it's near the end of the year. Then when you do your taxes (in Feb. hopefully) you can adjust accordingly.

Answer 2

Your taxes will be determined by a few things. 1)how much money you make 2)the number of exemptions you claim . In order to receive the most back at the end of the year, you have to withhold at the highest rate on your w-4, which is single 0, and then claim the most as possible on your 1040 at the end of the year. Just to set your mind at ease, the important is the return at the end of the year. The w-4 is mostly just a guide used so that employers know how much they should withhold from your check throughout the year.

In other words if you report your w-4 and 1040 identically, you should just about break even. Get your hands on the circular e for 2006 to calculate exactly what you owe.

Answer 3

The highest salary should claim 2, if no other deductions. The lowest claim 0. If at the end of the year, you still have a large refund (over $500) then one of you should up theirs. The ideal situation is between owing $100 and a refund of $100. No point in ginving the US Gov't an interest free loan for 12 months when you could use that money to fund savings etc.

Answer 4

You should not be paying the government extra money up front. If you are concerned about having to pay taxes at the end of the year, rather than paying more from each paycheck, put that money in a savings account and earn interest on it. You are basically giving the gov. a loan for free. Better to take out the free loan from the gov., make money on your money, and pay more in taxes in April. Your plan of the lowest earner claiming the dependents sounds like a great idea.

Answer 5

The CPA gave the best answer so far. You may want to check out the Withholding Calculator on the IRS website. It is designed to help determine the best number of exemptions to claim on your W-4s.

Answer 6

You can claim the dependents and have less money withheld from your checks, and still receive a refund at the end of the year.

Answer 7

Depends on how many deductions you have..If you have a lot claim more dependents

Answer 8

each of you claim one............and since you ll still have two to spare.(you and he) that is for tax purposes.......you ll be ok......when you do your taxes this year..........voice that question in depth to your preparer.........so they can show you on a computer......expected taxes.....for the coming year ahead......and then decide which looks best in your situation.........HR Block is sooooooooo good for doind that.......been there......they helped me a lot in it.

Answer 9

both of you should stay at zero you get more money when it matters the most,after all the best holidays!!!!!