We are a single-income family and we're about to have our first baby. How many exemptions should we claim on my husband's taxes? 3? Also, what difference does it make? My understanding is that they will withhold less money each month, but will we then owe money at the end of the year? Or will the extra deduction from having a baby kind of even it out?
Any insight is greatly appreciated!!
2007-05-04 03:51:06 · 5 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ United States
I always thought of getting a huge refund like giving the government an interest-free loan for the year. Refunds are nice, but I'd rather get our money now, rather than loan it to the IRS for a while. I just don't want to end up owing at the end of the year!
2007-05-04 04:04:17 · update #1
One child entitles you to a thousand dollars for Child Tax Credit right out of the chute, if you make more that $ 16,800.00 in a year. If you are making less than $ 33,000.00 you will also be eligible for EIC. I have done taxes since 1971 so if you send me your gross anticipated income for 2007 I will get back to you with the amount of your tax and what your refund would be excluding what you have withheld for FIT. 2006 figures for married filing joint are as follows; standard deduction 10,300; you, your spouse and one child at 3,300 each for a total of 9,900. This means that you could earn 20,200 and owe no federal income tax whatsoever. Remember that these are 2006 figures and that 07 numbers will be a little higher. You could put down 5 or 6 on your W-4 and have very little or nothing withheld and still be getting a refund. Anyway, if you want to send me your anticipated gross I will figure out how much EIC & CTC you will be entitled to.
2007-05-04 04:05:42 · answer #1 · answered by acmeraven 7 · 1⤊ 0⤋
You could increase your allowances to 3 and not worry about paying at the end of the year. You'll get more in each paycheck, but less at the end in your refund. But you'll be eligible for a $1000 child tax credit for the baby in addition to the extra exemption, which should make up for the decreased withholding.
And if your total income is under around $32,000, you might also be eligible for an earned income credit.
Congratulations on the baby.
2007-05-04 03:59:55 · answer #2 · answered by Judy 7 · 1⤊ 0⤋
Depending on your income, the child on your tax return could have a significant effect on your taxes. If you didn't owe money on your 2006 tax return, I'd go ahead and add another allowance to your W-4. If you did owe for 2006, leave the W-4 as it is.
Then, in the fall of 2007 (October), I'd look at the pay stubs and do a mock tax return. If it turns out you are going to owe, you can adjust your withholding for November and December if you want. But chances are, you will not owe.
2007-05-04 04:06:01 · answer #3 · answered by ninasgramma 7 · 0⤊ 0⤋
adding any exemptions on your taxes will give you back more money and it would be 3... However for this year, I would reccomend that you don't change it until next year... With your baby you will recieve more money back next year to even out the tax break... but for the years after you will not get a bigger chunck of money since you changed your exemption on Jan. 1st through the w-2 form...
2007-05-04 03:57:07 · answer #4 · answered by De 5 · 0⤊ 0⤋
Let it ride the first year you will be so glad to have that money back after christmas
2007-05-04 03:58:59 · answer #5 · answered by Anonymous · 0⤊ 0⤋