Filling out the W-4 Worksheet?

Question

Okay for this year I filled out 0 and am also having $10.00 taken out this was told to me by a CPA and that is what she tells her kids to do. I am 30 and single and I have also been told to take as much as 3 on the sheet?!
Can someone please tell me what they think is best for me in 06 I did 2 and 1 on state....

Thanks!!

Answer 1

If you are a wage earner taking the standard deduction, have only one job and have no other income that isn't subject to withholding, you can claim up to 2 withholding exemptions on your Form W4. This will result in something very close to a zero-tax due, zero-refund due situation. You should be within $50.00 of even money at tax time.

If you take your CPA's advice, you'll get a substantial refund at tax time. I don't know why she's making that recommendation, though, as it doesn't make much sense unless you WANT a large refund.

If you're like me and would rather have the money in your hand all year long instead of giving the government an interest-free loan, claim 1 or 2 withholding exemptions.

Claiming 3 would get you a larger paycheck BUT you WILL have a tax-due situation next year and may have to pay penalties and interest for underpayment of taxes.

Answer 2

And how did you come out when you calculated your taxes for 2006? If you still got a refund, or only owed a little, keep it the way you had it if nothing else changed much like your income or deductible expenses. It's possible, but not common, for a single person to take multiple allowances and still break even - usually would only happen if the person has lots of itemized deductions or eligible adjustments to income.