Will this affect my tax return for the upcoming year? I usually claim Head of Household and qualify for the child tax credit but have always claimed 0 on my W4. Will changing this affect my tax return?
2007-11-06 00:06:57 · 6 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ United Kingdom
You will see a bit more money in your pay check by claiming 3 - and that makes sense financially. Why let the government keep your money when you could be saving it. On the other hand, you have to be careful - it could be that come tax time you'll owe the government money, or you'll not see as big of a tax fund as you're used to. Of course, that's for the long haul. For the remaining two months of the year, it will only be a small difference.
2007-11-06 00:15:54 · answer #1 · answered by mJc 7 · 1⤊ 0⤋
Claiming 0 on your W4 increases the amount of your tax withholding. When you file your tax return you get a large refund. This is the same as lending money to the government interest free because you don't have the discipline to lend it to a bank by putting it in a savings account to earn interest.
Claiming your three dependents will reduce your tax withholding and increase your paycheck. Whether or not you claim the dependents on the W4, there is no effect on your tax return in terms of the amount of tax you have to pay. It only affects the amount of your refund. It is better to keep your money and not get a large refund. There is no benefit in lending money to the government with nothing in return.
2007-11-06 00:17:59 · answer #2 · answered by Anonymous · 0⤊ 0⤋
If you are talking about your tax REFUND, then yes, it will be smaller by whatever amount of money you get more in your paycheck. Claiming more on your W-4 won't change the total tax you pay for the year. It's the same money, what changes is when you get it - in your paychecks, or as a refund.
A refund is the return to you of an overpayment from what was withheld. It's like when you go to the grocery store - if you buy something for $5, you'll get more change if you pay with a $20 bill than if you pay with a $10 bill - that doesn't change what you pay for the item, or give you more or less money overall.
2007-11-06 02:24:39 · answer #3 · answered by Judy 7 · 0⤊ 0⤋
W-4s have NOTHING to do with what you are legally entitled to claim on your year end taxes.
You can claim (pretty much) whatever you want on your W-4, the only thing that effects is the amount of money withheld from your paycheck.
The end result will be that by claiming 3 on your W-4 they will withhold less (probably no federal taxes) on your paychecks. Which may, or may not, result in a lower year end tax refund.
That's it. Basically you are exchanging the governments free use of your money from all year. Right now they keep your money then you get it back when you file. By changing your exemptions, you get your money now and less later.
2007-11-06 00:26:57 · answer #4 · answered by Gem 7 · 0⤊ 1⤋
Absolutely!
If you put less in the account, you get less back at the end of the year.
Note: taxes are an interest free loan to the government. If you were better at managing money, and investing, you could take the same money, and get more back than you put in over the same period.
2007-11-06 00:16:11 · answer #5 · answered by Curly 6 · 1⤊ 0⤋
The W4 affects the amount the employer withholds from your net pay.
2007-11-06 00:16:44 · answer #6 · answered by Lu 5 · 0⤊ 0⤋