Single Guy with a tax filing??

Question

what are some reasonable tax deductions for my situation. I am a 25 year old single male. I rent my condo, and I have a pretty good job. I had to take my taxes to get prepared, and turns out I have to pay. I am pretty much caught because i am not married, and I rent. I am looking to purchase either a house or a condo this year though. Will this purchase give me enough deductions next year so I dont have to pay. I dont necessarily care if I get money back, I just HATE paying.. Lol... I have also heard of claiming 1 dependant during the year so that they take more taxes out during the year?? Does this work?

Answer 1

There are many reasons to purchase a house. Trying to save a bit on taxes is not among the best of reasons. Owning a home is a ton of responsibility. If you are simply interested in not owning come April 15th, then change your W-4 to Single with 1 withholding allowance (assuming you have only one job and no investment earnings). If you do have investments, then you may want to select Single 0 or even Single 0 with additional withholdings each pay period (there are three boxes on your W-4, Single/Married, Withholding Allowances, and "Additional Withholdings").

I fall into your category. I am single with no dependents and I make "good money". However, I like owing the IRS in April. Why? It means I had their money during the year and I made interest on it. In April, I'm paying them back what I should have paid them during the year. If the amount I have to pay is low enough, they don't charge me penalties or interest. If you really have a "pretty good job", why are you bellyaching about paying a relatively small sum of money? If you get your tax return together in early February, you have 10 weeks to come up with the payment. Surely that is plenty of time. Remember, if you do change your withholdings so that you are withholding more each pay period, you will have less in each paycheck. Is this what you really want?

Ultimately, it doesn't matter what you claim on your W-4s. Your tax liability is independent of your W-4. What your W-4s do is tell your employer how much to keep from you paycheck and pay to the IRS every pay period on your behalf. It is like paying for dinner every time the waiter brings out another course so that at the end of the meal, you don't owe so much. The lower the withholding allowances on your W-4, they more your employer takes out of your pay and gives to the IRS, and the more refund you will get come April (because you gave too much during the year).

Answer 2

What are you claiming now? Claiming zero gets the most taken out, so if you're claiming zero now, if you claim one you'll get even less taken out, so will owe MORE at tax time. You can ask your employer to take out additional money - you do this by entering a number on your W-4 form. Divide what you owe by the number of pay periods, and have that much extra taken out - you'll about break even the following year.

When you file, you get an automatic "standard deduction" that this year is $5150 for single. If your total itemized deductions add up to more than that, then you subtract that total from your income before calculating your tax, instead of the standard deduction. Some common itemized deductions are mortgage interest, real estate taxes, state and local taxes, and charitable contributions. Buying a condo might or might not help you, especially if you buy it late in the year so don't have much interest for 2007.

Answer 3

A home purchase will probably help in 2007 and going forward as it triggers a bunch of other deductions (property tax, state taxes, and charitable contributions).

Be carefull to buy something you can afford though. You don't want to pay a lot of mortgage interest just to get a tax deduction. The mortgage company will approve you for more than you should spend and they will probably mention the tax benefits so be carefull. A single person I know gets a nice refund every year because, in my opinion, he overbought on his house. He gets the nice refund but he his pretty much broke every month and he has no savings.

Answer 4

Relax. It's not hard at all. What you want to do is wait until your w2 comes in the mail (your employer has to mail it out after Jan 1st and before Jan 30th). Then you go to your post office and pick up a EZ form. The instructions are right on there, and it's all a bit of adding and subtracting. The numbers are on your w2, and you just fill out the blanks. It's that easy! But if you're really intimidated, you can just take your w2 and stop by a tax professional. I've even seen them in wal-mart! I would suggest it if you have student loans or things of that nature. But if you're a single guy with no loans and no house, just save yourself the money and do it yourself. It takes maybe 45 minutes. Good luck!

Answer 5

Try not paying someone to do your taxes for you. They are blood-suckers. So that's how you can save some money.
I would highly suggest NOT claiming 1 dependent because Judy is right, if you get more now, you'll pay more later.
I don't know of any tax deductions you can legally take at this time. Sorry guy, you're just going to have to pay. Just make sure to pay by April 15th. If you can't pay it all at once, at least make a reasonable payment by that date and ask for an extension of time to pay- they give you up to 90 or 120 days (i forgot) from the date they send you a Balance due notice. However, interest begins to accrue on April 15th.

By the way, you cannot claim Head of Household unless you have a dependent and provide more than 50% of your household expenses. You cannot claim your parents (or grandparents) as a dependent for Head of Household filing status.

Answer 6

If you provide more than 50% of the support to at least one of your parents (and check the IRS pub for more details including "special rules for parents"), you qualify for filing as head of household (HoH).

Filing as HoH saves you more taxes than filing as "married" or "single." You have to be unmarried to be eligible to file as HoH. You avoid the "marriage penalty" altogether by filing as HoH.

Of course, your dependent parent can qualify you to file as HoH if you follow the rules set by the IRS:
http://www.irs.gov/publications/p501/ar02.html#d0e2117

Just play by the rules and save tons of taxes. Break the rules and you lose big. Don't get married or you'd lose your HoH filing eligibility. Buying real estate to save taxes is a good idea on top of your HoH filing status.

Improve your filing status before you adjust your W-4. Otherwise, you risk paying underwithheld penalty.