I was recently married and up until now we have both claimed Single, 0 on our w4 and got money back from the IRS every year although they take alot of money out of our checks. Should we stay at single, 0 and claim married when taxes come around or should we claim married, 0 now? It would be nice to see a little extra in our checks. We also just bought a house and we like tax time to be like a savings plan. What is the best bet??
2006-11-02 08:37:20 · 4 answers · asked by Kelly D 1 in Business & Finance ➔ Taxes ➔ United States
The lowest paid spouse should claim married with 0 exemptions. The higher paid spouse should complete the W-4 worksheet to see how many exmeptions to claim.
I would suggest that you not over withhold to a great extent. Take the extra take home pay you receive after adjusting your withholding and invest it. The government doesn't pay interest on overpaid taxes and in the long run you will be way ahead by investing this money consistantly.
2006-11-02 08:46:40 · answer #1 · answered by waggy_33 6 · 1⤊ 1⤋
I agree with the prior poster. There isn't a good reason to overwithhold your paychecks, unless you know you can't possibly save money any other way. Why give an interest free loan to the IRS when you could set up a money market account with HSBC Direct and earn 5% interest? That said, the seemingly most reasonable withholding rate would be to have the higher earner at M-1 and the lower earner at M-0. Much of the decision about how to withhold, though, is based on the rest of your tax return. If you have interest and dividend income, you need to allow for that when you decide on your withholding. You also may have the possibility of itemizing this year, depending on how much interest expense you will be paying during 2006. You'll most likely get some refund, no matter what.
Hope that helps!
2006-11-02 09:25:23 · answer #2 · answered by SuzeY 5 · 0⤊ 0⤋
I tell my clients that, depending on how much they want to see back, they should adjust their W-4 as Married with one and Married with 0. Refund depends on who makes the most. The fewer exemptions you claim on the W-4, the more that is withheld. Whatever you do, NEVER follow the instructions on the W-4. Every client I've ever seen do that ended up paying in at tax time.
2006-11-02 11:36:34 · answer #3 · answered by Great Tax Info 2 · 0⤊ 0⤋
If you leave it at 0 for both, you'll get the most back.
You can claim 2 if you are married, though there is a potential for owing $$.
2006-11-02 09:20:12 · answer #4 · answered by Anonymous · 0⤊ 0⤋