Should I claim 2 instead of 0 dependents on my W2?

Question

here's the deal - I am married have 2 kids in college and 1 in high school. Each year we pay taxes because my husband makes pretty good money. - i am claiming 0 dependents at my very low paying job - my employer is starting a new retirement program where they will match up to 4% of my contributions. should I claim 2 dependents and sock the difference away in this retirement because it's pretax? and will i still end up paying taxes and maybe even more since i will be claiming 2 rather than the 0 I am claiming now??

Answer 1

Have as little taken out of you paycheck as possible, and save as much as possible. Otherwise, you'll be allowing the government to use your money.

Answer 2

Socking away extra into a retirement fund, especially up to the amount they'll match, is a very good idea. And having that deducted pretax will by itself cut the withholding a little from your paycheck. If you are ending up already having to pay every year, then changing your W-4 to 2 might end up with you having to pay even more unless your husband changes HIS W-4 too, and drops the number of allowances that he claims by one or two. Since you don't say how high his "pretty good money" income is, or what yours is, it's not possible to tell just what result these changes will have.

If the college kids are your dependents, you should get an education credit for part of their tuition and fees - that should be helping your tax situation some. And if your high-schooler is under age 17, you'd still get a child tax credit for him or her. Unless your total income between you is VERY high, those should help a lot with your tax bill.

Answer 3

HI,
(The W-4 form is what you need to fill out to determine your dependents.)

I have a few questions first.
Does your husband claim any dep. on his W-4 during the year?
If so then you are both claiming dep and that may be the reason you are having to pay.
If you have three children and your adjusted gross income is not to much then you may be able to qualify for some nonrefundable or refundable credits depending on your situation. If you have children in college and you are paying for some or all of the expenses then there are benefits to that, but without know your whole situation it is hard to be specific. If you can contribute to a 401k then by all means do so. This money is tax free as long as you leave it in the 401K and don't take any distributions from it. The maximum amount you can contribute is 4000 and if you are over 50 it is 5000 called catch up.
I hope this helps

Answer 4

if your employer is doing a pre tax savings that amount you put in should be a tax deferal and you won;t pay tax on that amount. best way is to take an old tax form and use as a guide line and write down your wages and interest from last year, than do it again with the tax dollars that are taken from your wages this year and make a mock draft of how your wages would be with the new tax savings and one without it and you'll be able to come up with how much you'll either save or pay in tax and if you save money by doing it with the savings than do it. Just remember we all have to pay tax either now or when we take out the savings, so they get you one way or another, but as long as you can save now and lower your taxes it's better because when you get older you'll start working less and therefore make less money and that will put you in a lower tax bracket and you can than take your savings money a little at a time.

Answer 5

Something sounds really fishy here. I'd be very concerned as to whether your boss is depositing the taxes properly, since she's doing a lot else wrong and illegally. First of all, she can't just decide how many allowances to use for you, she is required to have you fill out a W-4 form. Secondly, she is required to give you a paystub. And without one, you have no proof that anything was withheld, so if she's playing games here, you are going to be seriously out of luck. And if she is taking out properly for you and your two kids, sounds like she's taking out way too much, unless your deductions include more than taxes, like medical insurance or something like that. Since you don't say where you live, there's no way to tell you what should be deducted. Please post again with that added info and somebody can answer your question better. Tell her you need a paystub showing each deduction and how much it is. If she refuses to give that to you, call your state department of labor and tell them what's going on. On a biweekly check of $819, there should be a deduction for social security and medicare of $62.65. With three allowances your federal income tax deduction should be somewhere around $25 each pay. I'd start looking for a new job.

Answer 6

It is always a good thing to put money away into a 401k plan. You should put the maximum amount into the plan to get the 4% match from your employer. The only tax that will not change by doing this is your FICA & Medicare.

As for the other factors, you should really seek a professional to do some serious tax planning for your family.

Answer 7

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