Is it better to claim 1 or 0 ?

Question

I am 23, single, no kids & I support myself , Ive always claimed 0 on my W-4 forms but recently I changed it to 1 and claimed head of household because my 19 year old niece live with me & I pay more than 50% to sustain my household. I would rather get more money every paycheck then a big return(even though its nice) but my financial situation leads me to need more money every month rather than once a year. Either get a little back or just break even but I definantly do not want to owe anything.......did I make a good move? what do you guys think?

Answer 1

I agree with your decision and you analysis. I also agree with the answer that suggested '2' may be a better option. Don't take our word for it. Use the IRS withholding calculator linked below.

Answer 2

You definitely made a good move. It's better to have more take home on each check than wait until your tax refund. Re-check your W-4, you may be able to change it to more than 1. Helped a friend with hers recently and she was able to claim 2 - herself and head of household - even without children. Unforunately because of your age you cannot claim Earned Income Credit. You must be at least 25 years old.

As the year progresses, monitor your pay stub (assuming year-to-date withholding totals are included) to see if you are at least 'breaking even according to your last tax return. If not, you can keep your number of exemptions the same but have a flat dollar amount withheld in addition. This can be done for both federal and state.

Answer 3

Claiming 1 will get you more each paycheck, although probably not that much different. You could even claim 2 to get a little more since you have a dependent. If you got a refund for 2006 even after claiming 1 all year, it is probably safe to claim 2 for 2007, all other things being equal.

Answer 4

Is your niece your dependent for tax purposes? You can claim her if she's a full-time student and doesn't provide more than half of her own support, and she lived with you over half the year. If she made under $3300 gross for the year, and you provided more than half of her support, and nobody else can claim her as a qualifying child, then you could claim her. If neither of these situations is the case, you can NOT claim her as a dependent. If she's not a full-time student, and she makes over $3300 per year, then forget about claiming her. And if she's not your dependent, then you can NOT claim head of household filing status. Providing over half the cost of sustaining your household is only part of the requirement - you also need to have a qualifying dependent to file as head of household.

That said, if she's legally your dependent for tax purposes, then you should be OK claiming one allowance, and could probably claim two without owing at the end of the year as long as your niece ends up being your dependent for 2007..

Answer 5

I claim 1 and have always done so. I think if you claim 0 or 1 you will be fine any more than that I would expect to pay in. I know this because my bro and a friend got screwed and had to pay in where as I had a hefty refund on my hands.

Answer 6

That's a good analysis. In fact, you could probably claim the true number of dependents (2), though you'd risk having to pay a small amount. But IF you're disciplined (and only if) and don't absolutely need the few extra dollars, you could deposit them into a savings account, get interest, and pay any year-end tax from that account.

Answer 7

the human beings above who say you ought to declare 0 are often misguided once you're searching for the utmost go back on you money. One man or woman above develop into impressive contained in the mathematics for the diagnosis for both. usually, confirm out how a lot you could really deduct on your April 15 1040. because you're unmarried and performance no dependents, you could likely declare 2 (unmarried and private exemptions). in case you declare 0 blindly, you're in essence giving the authorities an interest loose loan. as an celebration, they're going to take out an better one hundred$ each month and then write you a examine for a "tax refund" for 1200$ six to eighteen months later. there is not any benefit from that if the money develop into yours firstly. once you've not any spending discipline, you may want to open a economic employer account and deposit that better one hundred each month and earn interest on it and be extra efficient off. there is not any element in giving loose money to the authorities in order to fulfill the attraction of having a examine for money that develop into yours. you've the idea backwards. The extra you declare on your W-4, the a lot less they take each month.

Answer 8

Claiming 1 is fine, you'll get more at the end of the week and less at the end of the year. You probably and that is a probably won't owe, but you never know depending on how you do your taxes and what you make. One thing to watch is when you file your taxes you need to figure out what your niece is doing, you can't declare her as a dependent if she claims herself or if someone else claims her. The IRS probably won't audit, but they'll tell you to resubmit with it corrected.

Answer 9

I would claim 0. If you are single with no kids, you are going to be in the highest tax bracket.
If you neice claims herself on her tax return, you won't be able to claim her on yours. And even if she doesn't claim herself, I don't think you can get a child tax credit for someone who is not a child, and not your child. You would have to consult a tax advisor on that.
My advice to you is to put away your refund each year, in a savings account, so that you have a back up throughout the year if you need it. Also, evaluate your budget and cut back where you can, so that you can live within your means while claiming 0 dependents.
My brother is single, no kids and claims himself....he ends up owing money EVERY year.

Answer 10

if you are looking to about break even, better to claim 1. The more you claim the more you receive of your paycheck each time.