I have it on zero right now. Can I change the number up to two? The loan was for $577,000. I do not want to owe at the end of the year. Filing as married. Only answer if you know what I am talking about. THANKS!!
2007-05-16 08:31:27 · 5 answers · asked by Nicolleta 2 in Business & Finance ➔ Taxes ➔ United States
You may want to download http://www.irs.gov/pub/irs-pdf/fw4.pdf and fill out the worksheet on the 2nd page. Otherwise this is a difficult question to answer without knowing if your spouse works, if they are changing their withholding, the interest rate on your loan, your marginal tax rate, etc...
Another trial-and-error approach is to go to http://www.paycheckcity.com and play with the allowances and see the change in taxes withheld. See how much less you'd have withheld from here to the end of the year with a given number of allowances and compare to the reduction in taxes you'll have due to itemizing mortgage interest.
Crude example of the reduction in taxes due to itemizing mortgage interest:
loan: 577K
interest rate (assumed): 6%
approx interest paid in 7.5 months of this year: 21.6K
assumed marginal tax rate: 25%
tax reduction = 21.6K * 25% = 5.4K
So you would want to change your allowances to have 5.4K less withheld between now and the end of the year.
2007-05-16 08:50:43 · answer #1 · answered by mliu327 2 · 2⤊ 2⤋
With that size of loan you will have a large mortgage interest deduction. And you likely have a large salary and pay a lot of taxes.
I suggest you do a mock tax return, using the 2006 forms, using the mortgage interest deduction and property taxes. See how much it reduces your income taxes. Then ask your payroll department how many allowances on your W-4 it would take to reduce your withholding that amount, over the remainder of the year. Then change your W-4.
You will need to adjust your W-4 in 2008 again, since it is already May and the level of withholding you will do for the last half of 2007 may be too much for 2008.
2007-05-16 12:09:06 · answer #2 · answered by ninasgramma 7 · 0⤊ 0⤋
You have two tax benefits to paying a mortgage and owning a home. To use either one, you must itemize deductions on Schedule A
1. the mortgage interest you pay during the year
(reported to you on form 1098)
2. Property tax
these may not be enough to make much if any change in the total tax due, so be careful changing yur W4
2007-05-16 10:08:18 · answer #3 · answered by Jo Blo 6 · 1⤊ 0⤋
Buying a house doesn't change payroll status. What you claim for deductions on payroll is the number of dependents you have. You are one, Your spouse is another. Each child is another. You can legally claim any number you choose (there is a limit) but the higher the number equals the less taxes taken out of your check so when you file you will either owe more or recieve less of a return based on your situation.
2007-05-16 08:41:55 · answer #4 · answered by bernel1403 5 · 0⤊ 4⤋
That's correct
2016-09-19 15:49:46 · answer #5 · answered by Anonymous · 0⤊ 0⤋