We are getting a bonus at my work, a lot of the people are talking about changing there tax status for this check so that they don’t get the entire bonus taken away. They will then change it back to whatever they have for the next check. I understand you can claim up to 10. I currently claim 0. What should I claim to get the most money in my paycheck now? 1 thru 10?
2007-03-11 09:49:11 · 4 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ United States
I would claim only the maximum that you are entitled too. If you are single and do not itemize, that would be Single and 1. If you have children you can claim an exemption for each child. If you itemize, you can add an exemption for each $3,300 you believe you will be itemizing above the standard deduction. Be careful about claiming extra exemptions on your W4 however. You don't want to owe IRS.
2007-03-11 10:09:35 · answer #1 · answered by exirsman 5 · 0⤊ 4⤋
I'd advise against this. Even if you were to change your withholding (if it were possible), the bottom line is you will still owe what yow owe. The W-4 just helps the government estimate what you need to pay at the end of the year.
Let's say you will owe $2000 from this bonus. You change your withholding (if it were possible) and the government only takes $200. Guess what...at the end of the year, you will still owe that $1800. Because you didn't pay it when the bonus was paid, you will have to cough it up at the end of the year (hope you have good savings). And if you usually get a good refund, this could cancel it and you may have to pay. If you usually have to pay, well, best of luck coming up with that amount of money.
2007-03-11 17:10:11 · answer #2 · answered by CG 6 · 0⤊ 0⤋
Changing your withholding status for the bonus won't matter. If your employer handles bonuses properly, they will withhold at 25% regardless of your withholding status. Irregular payments, such as bonuses, are subject to withholding at a flat 25%.
The reason for this is to prevent the exact abuse that you are planning. Even if your employer does it improperly it will not affect your tax liability for the year. If you have too little withheld from the bonus you could well owe when you file your 2007 return next year.
2007-03-11 16:55:22 · answer #3 · answered by Bostonian In MO 7 · 2⤊ 0⤋
I was single and no dependents, when I get my bonuses they usually take about 40% of it... but girl, u don't want to cheat the IRS...
2007-03-11 16:58:30 · answer #4 · answered by Cometa 2 · 0⤊ 1⤋