I am 31 and single and am thinking of changing my w-2 from 1 fed. 1 state to 2 and 2. I am trying to save more money then giving it to the government. Just trying to get advise if I should leave it or do it. I would be adding the extra money to my savings account.
Thanks for the help!!
2007-05-12 15:47:56 · 7 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ United States
Thats a great idea, why let the government have an interest free loan from you for a year, and then you get it back in a refund when you file your 1040. You can visit the IRS at www.irs.gov, click on the individuals link, and then scroll down some until you see the witholding calculator. This will help you determine what you should claim that way you don't have too much, or too little taken out of your check.
I think it's great you are putting it in your savings account, but let me ask, what are you doing to save for retirement? Once you have enough money in savings, you should consider mutual funds/I bonds, or something other type of plan that best suits your needs.
I do wish you well!
2007-05-12 15:56:05 · answer #1 · answered by Jerry K 2 · 0⤊ 0⤋
Chris, keep in mind that you can surely change your withholding from 1 to 2. However, your taxes will be calculated basis your actually filing status. The taxes that are paid out of your regular pay checks will be somewhat representative of what an individual claiming 2 would pay and a little more. If your actual filing status is only 1 with filing your 2007 taxes, then you should be prepared or have available savings if in fact your actual taxes paid are less than what you owe. I do agree that you would in a better shape by saving the money and earning interests vs. giving the government a tax free loan. Unfortunately, there are many people with the same goal in mind, however, the end of using the money for something else and never get around to saving the money as they intended. I hope that this helps.
2007-05-12 22:56:15 · answer #2 · answered by Dotch 2 · 0⤊ 0⤋
I'm single and I claim 8; with the rest of my deductions (deductable mortgage interest, etc), I come out about even every year. If you got a sizeable refund last year, you should be able to change the 1 to a 2 without having a huge tax bill at the end of the year.
2007-05-13 01:11:29 · answer #3 · answered by dcgirl 7 · 0⤊ 0⤋
Best bet is to use the worksheets from the W-4 form to see the amount of exemptions to claim. If you increase the number of exemptions beyond what your individual situation warrants, then you will owe tax when you file your tax return. That isn't so bad. However if you underpaid your taxes by too much then you would be charged underpayment penalties, for not paying your taxes soon enough.
2007-05-12 22:55:06 · answer #4 · answered by cwald888 3 · 0⤊ 0⤋
Without looking at your tax return it would be unwise to give you guidance on such a matter. The idea is to get you withholding reasonably close to your tax liability. You are subject to a penalty if the withholding is not within $999 of the tax liability .
2007-05-12 22:55:54 · answer #5 · answered by ? 6 · 0⤊ 0⤋
Did you get a refund last year, and is everything pretty much the same this year as far as income and personal circumstances? If so, go ahead and make the change.
2007-05-12 22:56:31 · answer #6 · answered by Judy 7 · 0⤊ 0⤋
you can use this withholding calculator to help you figure out what you should claim. it is from the irs.gov website.
http://www.irs.gov/individuals/article/0,,id=96196,00.html
2007-05-12 23:07:53 · answer #7 · answered by johnec4 3 · 0⤊ 0⤋