W-4 advice?

Question

I got married in July. I'm putting down married joint with 0 allowances for my 2007 w-4. The IRS advises that in our financial position we should withhold an additional amount in our paychecks. I'm not so excited about giving the government a free loan that won't be paid back for 16 months. Any thoughts on this?

Answer 1

Withhold enough so that no matter what you owe nexzt April you would not be in an underpayment penalty situation. If AGI for 2006 is less than $150,000 then withhold an amount for 2007 equal to the tax shown on your 2006 return before payments. I think this is line 54 on the 1040. I agree with you I would rather owe them with the return as long as it doesn't cost me a penalty.

Answer 2

You need to decide if you would rather owe money at tax time or get a refund. If you dont mind paying then married zero may be enough. Without an idea of how much you make I can't be sure. However married but withhold at the higher single rate may be the safer route. Or if you want to take out the guess work just decide how much extra based on a 52 paycheck year and choose that amount to withhold each week. Good luck.

Answer 3

You are not clear with your info. If your wife also works then you should both put down zero. It is always better too have a refund than having to get a second mortgage to pay your taxes on the 15th of April. If your wife doesn't work then you can put down 1 or 2. You have to read the top section of the W-4 form to plug in your details and come up with an exact number. If you are both working be sure and use the reverse of form W-4 so you don't get caught short.

Answer 4

The IRS has a withholding calculator on its website. It is does a better job of estimating withholding than the worksheet given with the W-4. See link below

Answer 5

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