Claiming 1?

Question

I dont understand why if I claim one all year long, when it comes time to file my federal taxes, why do I owe? Shouldnt it be if you claim one all year, when you file your taxes you should atleast break even? I owe money! However, I get money back from state. I dont understand!

Answer 1

the reason you owe, is your empoyers fault, they are not taking enough out of your check.

claim 0 on your W-4, you can ask your employer for a new form or get at www.irs.com, then give it to your employer, then at tax time file as 1, then you will not owe.

Answer 2

You cannot know, in advance, how much your total earnings will be and cannot know, in advance, what your tax bill will be. Claiming one deduction is an effort to get close to the amount of taxes you will owe at the end of the year. Depending on filing status, people earning the same amount of money will not owe the same amount in taxes.
I have to pay estimated taxes every year, both federal and state. I never get close to the amount actually owed. Sometimes I owe more and sometimes I get a refund.
I prefer paying at the end of the year, rather than getting a refund. If you pay too much, the government gets free use of your money, and it takes months after the end of the year to get a refund back.
Once I owed $980 to the federal government. Because I owed so much, I had to pay a penalty...which was one dollar. It was almost funny.

Answer 3

Technically you should be able to claim 2 exemptions on the w4.

Line A - Enter "1" for yourself if no one else can claim you as a dependent.
Line B - Enter "1" if you are single have only one job; or you are married, have only one job, and your spouse does not work; or your wages from a second job or your spouse's wages (or the total of both) are $1000 or less.

After that you get additional allowances for spouse and dependents. If you earn a lot of interest or have other income where tax was not taken out then you should lower the allowances. The w4 has a worksheet for that.

Note that allowances are not the same as exemptions on your 1040.

BTW: If you owe a few hundred be happy. If the money was taken out with each check you would not be able to save it and earn interest prior to paying the tax. It is always better to owe than to get a refund as long as you owe less than $1000.

Why don't you look at the employers tax guide at the irs site and see if your employer was computing the taxes correctly.

Answer 4

It used to work that way. George H. W. Bush made this change to the withholding calcuation shortly before the end of his term. (I want to say "before the '92 election," but I'm not sure.) People had more take-home pay after this change. They didn't have to file taxes and reconcile the withheld amount with the amount due until after he left office. He didn't change the tax rate, only the withholding calculation. A lot of people paid penalties that year for under-withholding.

Ultimately, like everything else tax-related, it's up to you to make sure you've had enough withheld, regardless of the government-recommended withholding amount employers use. Use IRS Publication 919 to calculate your withholding.

Answer 5

Your employer did not take enough out of your pay check all year long. There is a recommended amount to be sent for taxes, you need to make sure the recommended amount is deducted and sent.