Should I claim "0, 1 or 2" on my W4 form?

Question

If using the formula that's on the paper I'm supposed to claim "2"- 1 for being single +1 for being the sole provider.

I then heard I should claim 0 which takes more taxes out now but lowers the chance I'll have to pay taxes in April.

Someone else told me to claim 1 because that way I'll get more back now..

What should I do? I currently have it at 1 and about $400 was taken out of my first check. Thoughts?

If it helps, I just graduated and my loans come back into repayment in December. Is there anyway I can use this to my advantage when it comes to the taxes? I'm also independent so I'm not living my parents.

Thanks!

More about me:

Single
Renting an apt.
started this job in July
No kids
Lots of student loans!

Also, I have a 403B plan and a bank savings account.
Any tips on finding a personal financer?

Answer 1

Claim 1 exemption, if you want to owe no money and get a small refund next year.

Claim 2, if you want to cut it close: you might get a small refund, or you might owe a small amount of tax.

Claim 0, if you want a larger refund next year.

Re your loans: they won't help now with your taxes, because you don't "itemise" your deductions. Solution: find a financial adviser (maybe ask your accountant or banker for a reference) for advice, and start planning to buy a house and put max dollars into your 401k and Roth IRA. At this early stage of your career -- get yourself informed and find a good financial adviser to help.

Answer 2

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Claiming 0 versus 1 will mean you have more withholding taken out, and less net take home pay. I personally don't see the point why anyone would want to have more withholding taken out than they are required to have. If you are getting a $5,000 or $10,000 refund every year, that is just overkill. Some may look at it as a "forced" savings plan, but you are basically giving the government an interest free loan for one year. And you can't really even say that it is a savings program, since most likely once you receive your refund, you will spend it on bills, or whatever. If you were getting a $6,000 refund, and you reduced your withholding so that you were paying in just what you owed, then you would increase your monthly take home pay by $500 a month. Even if you were to take that $500 a month and stick it in the bank, you would at least get 0.5% interest on the money, which is still better than the 0% interest the government is paying you.

Answer 3

If you don't have any dependents, but are thinking you should check the head of household box because you are the sole provider - you are NOT head of household for tax purposes, that's only if you have a dependent. If you only have one job though, and are talking about line B, then yes you could put 1 there, for a total of 2. If you claim 2 allowances, you could end up owing a fairly small amount when you file. Claiming 1 would probably be better.

You say you just graduated. If you haven't been working, or haven't made much, during the first half of the year, you could probably get away with claiming 2 until the end of the year, but then I'd consider switching to 1.

Depending on your income, you will very possibly be able to take an adjustment to income for at least part of your student loan interest - that won't help a lot this year since you'll just have December, but could help next year since you'll be paying all year.

Answer 4

Are you the sole provider for another person? Otherwise it is just you and I would claim 1.

If you have more money taken out by filing 0, you'll get a refund back at the end of the year. Problem is that you are giving the Government an interest free loan and losing the ability to use that money during the year.

Answer 5

We are an accounting firm. Read the instructions and then you will know. http://search.irs.gov/web/query.html?col=allirs&charset=utf-8&qp=&qs=-Wct%3A%22Internal+Revenue+Manual%22&qc=&qm=0&rf=0&oq=&qt=w4+instructions&search.x=0&search.y=0&search=%26%24self.text%28u%27search%27%29%3B

P.S. The general rule is this. You are 1. You will claim your exemption and otherwise and your parents will not, you will claim 1. if you are 1 with baby you would claim 2 and so on and so forth. That is what will most. Now if you have 9 dogs 3 cats 1 guinea pig and 1 baby how many do you claim. 2. You and the baby.

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Answer 6

What To Claim On W4

Answer 7

You claim for only the amount of people YOU support. If it's only you, put "1". They may take out more money per check, but you should get most of it back at the end of the year, depending on how much you made.

Answer 8

Claim 1. They do take more out of your first few checks each year and each time you change jobs. That's because they don't know how much you are going to make that year. Toward the end of the year, they will have a better idea and take out less.

If you have a house and itemize deductions, claim 2. If you take the standard deduction, claim 1.

I'm assuming you have no kids. If you have kids, claim 9. I claim 9 (head of household, 2 kids) and still get back money.

By claiming zero and having more taken out, all you are doing is giving the IRS an interest free loan for the year. If you are concerned about owing taxes in April, set aside some in a savings account and earn some interest on it. Don't loan it to the gov for free.

Answer 9

If I were you, I'd use the Withholding Calculator on the IRS web site:

http://www.irs.gov/individuals/article/0,,id=96196,00.html

Last time I used it, I received an $11 refund when I filed. Which is a win in my book.

By the way, interest you pay on student loans is deductible on your tax return. Another win in my book.

Answer 10

I have always claimed 0. Get more taxes back at the end of the year.