Me and my wife got married this year. I make less than she does by about $10,000. Now i was thinking about filinf head of househould and claiming our daughter so it can work out in our favor. Now how many dependents should me and her have claimed in the year 2006 in our W4? Is it smart to make me the head of household or her? Please let me know, or show me where I can get some info on this. Thanks
2007-01-06 05:32:06 · 5 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ United States
Alright, let's get your tax house in order.
First. If you were married before 11:59pm 12/31/06 you only have 2 Filing Statuses to pick from: MARRIED filing joint or MARRIED filing separately.
Due to the tax changes in 2004, Filing Jointly will just about ALWAYS save you money.
If you improperly file as Head of Household so one or both of you can maximize EIC, you will be committing FRAUD. Don't do it!
As far as what you should have claimed on your W-4's for 2006--it's TOO LATE to worry about that. Your earnings and withholdings are DONE for 2006.
For 2007, you can file new W-4's. Generally, assuming there's no EIC (your joint income is over $39K), then you want to set your W-4's (both of you) to MARRIED. If you both work, the higher earner should set the total exemptions to the total number of people on your return. The lower earner should set exemptions to ZERO. This will get your withholdings pretty close by year's end so you won't have a large amount owing, but you won't get a humungous refund either.
The WealthBuilder
Tax Specialist
2007-01-06 05:47:36 · answer #1 · answered by WealthBuilder 4 · 3⤊ 0⤋
First of all, since you're married, neither one of you can file as head of household. That's only for people who are single, or under certain circumstances people who are married but haven't lived together during at least the second half of the year.
Second, since you're married, you're eligible to file jointly, which has better rates anyway than head of household.
Your only legal options are married filing jointly and married filing separately - joint is almost always better for you.
If you have one child, then you should probably be claiming three allowances total at most for the two of you - if you want to be on the safe side, probably each claiming one would be a good idea.
2007-01-06 19:47:09 · answer #2 · answered by Judy 7 · 0⤊ 0⤋
When you say were married this year do you mean in 2007 or within the past year (meaning w/in tax year 2006)? If it's the latter, you can only be married and file as head of household if you were legally separated from your wife during the tax year or if you and her were physically separated for the last six months of the tax year. Otherwise, you can only file as married filing separately or married filing jointly, and filing jointly hold the most tax advantages of the two.
2007-01-06 13:45:14 · answer #3 · answered by Mr. Zimmer 3 · 2⤊ 0⤋
Your filing choices are joint or married filing separately. Head of Household is not available if married and living together.
Get turbo tax and plunk in your info and see if one or the other is better. If in a community property state make sure you consider that you "share" each others income.
From Publication 17
Community income. If you are married and your permanent home is in a community property state, half of any income described by state law as community income may be considered yours. This affects your federal taxes, including whether you must file if you do not file a joint return with your spouse. See Publication 555, Community Property, for more information.
See page 22 for filing status info on head of household. N/A if you are married
2007-01-06 13:42:47 · answer #4 · answered by zudmelrose 4 · 1⤊ 0⤋
You have to file MFJ or MFS. I always suggest for the W4 that you always claim 0 or 1 if you expect to get a refund, also so you can be sure that you will not owe the government when tax time comes. The $ amounts increase when you file Married filing jointly. Also, the standard deduction increases from $7,500 for HOH to 10,500 for married filing seperately.
Earned income and adjusted gross income (AGI) must each be less than:
$36,348 ($38,348 married filing jointly) with two or more qualifying children;
$32,001 ($34,001 married filing jointly) with one qualifying child;
$12,120 ($14,120 married filing jointly) with no qualifying children.
If you file seperately, you do not qualify for the credit at all.
2007-01-06 20:42:29 · answer #5 · answered by Smart1 3 · 0⤊ 0⤋