I work full-time w/ alot of overtime, my wife worked full-time, but is now on maternity leave for a year (currently works part time), we just had or 1st baby (6 weeks old). Any help would be greatly apprieciated, Thanks.
2007-09-07 09:25:49 · 5 answers · asked by nbruno518 1 in Business & Finance ➔ Taxes ➔ United States
www.paycheckcity.com is a paycheck calculator website that can probably best help you
2007-09-07 09:51:43 · answer #1 · answered by Anonymous · 0⤊ 1⤋
There is no legal requirement for the exemptions on your W-4 to match anything in reality. It's just a way to figure how much taxes you want withheld. I use Married and 40 because I have a large family and owe little to no taxes and I do not want my employer to take anything out of my paycheck. This is an extreme example, but I obviously do not have 40 exemptions on my tax return. With only one income and a new baby, you can probably increase your exemption one or two numbers, but the final number also depends on if you have a mortgage, daycare, IRAs, 401Ks, health insurance, etc. The worksheet mentioned above will help, but do not worry about any legal consequences of the exact number. The only risk is that you might owe at the end of the year. To avoid that, drop your number 1 point and enjoy your return at the end of the year.
Also consider seeking a professional, like H&R Block since they will also give you financial advise and will tell you how other life changes will affect your taxes (like buying a house for the you and your new baby!). Congrats.
2007-09-07 16:47:50 · answer #2 · answered by Patrick S 3 · 0⤊ 0⤋
You can always claim yourself, so that's 1 exemption. You can also claim your wife, so that's now 2 exemptions. But the problem is, if you're both working, you may owe more taxes than what's being held from your and her paychecks. So you might want to claim Married But Withhold At the Higher Single Rate. And then, you can claim an exemption for your baby, even if he was born on Dec 31st, as a baby is STILL a deduction for the whole year.
Now, WHY check the Married But Withhold at higher rate? Because, if you don't have enough income tax withheld by filing time, you WILL be fined. It doesn't matter that you include a check to make up the difference. It doesn't matter that it was an honest mistake. The fine will still apply.
2007-09-07 17:51:05 · answer #3 · answered by Marc X 6 · 0⤊ 0⤋
If your wife is claiming 1 for herself, you'd be pretty safe claiming 2 (you and the baby). If she's claiming 0, you'd be Ok claiming 3. Since you'll get a child tax credit, you'd probably be OK claiming 1 or even 2 more that that, but to be safe, I'd stick to 3 total between you until you see how you come out at the end of the year. There are way too many variables to figure out from just the info you gave where you'll really stand.
2007-09-07 22:20:04 · answer #4 · answered by Judy 7 · 0⤊ 0⤋
The main thing is that you don't want to owe the IRS money at the end of the year. When you go to file your tax return in 2008, it sounds like you and your wife will be claiming 3 (you, her and the baby). You will also be receiving a child credit. So go to http://www.irs.gov/individuals/article/0,,id=96196,00.html and use the IRS withholding calculator to help you figure out what to claim. I have used it in the past and found it to be fairly accurate. Good luck to you and congratulations on the new baby!
2007-09-07 16:34:26 · answer #5 · answered by jml167 4 · 1⤊ 0⤋