Question about W-4 and exemptions?

Question

I just got a new job (yay for me!) and am filling out my W-4 for the first time since graduating college and not being a dependent. For exemptions, I've always claimed 0 on line "H" but would like to get more money back each paycheck because I'm on a tight budget.
I'm pretty sure I can put 3 exemptions:
1 for line "A" that no one else can claim me as dependent;
1 for line "B" single with one job, and
possibly 1 for head of household.

I am not sure about the head of household though. I live by myself and most of my income goes towards rent and utilities but I am not a homeowner.

So really I have two questions.
(1) Can I claim being head of household?
(2) Which will get the least taken out of my paycheck, 0 exemptions or 2-3 exemptions? Or just 1 exemption?

I do know I'll get hit harder in April, but by then, I will have more money to pay it whereas now I need more each paycheck.

Thanks so much!

I know that I will pay more in April if they take less out during the year. What I need to know is how to get less taken out from my paycheck.

If I don't claim Head of Household (I didn't see the dependents part of that description), I can have either 1 or 2 exemptions, or put 0. Which means less withholding each pay period?

I don't think the 401(k) starts for a year and I will be able to put aside pre-tax dollars for medications but that won't go into effect until Jan. 1st. So I'll be back on here trying to figure that out too! Thanks for the advice! I'll put 2!

Answer 1

Hello! Congratulations on obtaining a job! It's a tough market out there! Ok, to answer question 1 first...no, you will not be able to claim Head of Household. Head of Household are for individuals who have legal dependents that he/she supports AND live with him/her more than 50% of the time. Being a homeowner isn't considered. That's a completely separate issue/tax deduction all together. With the way the market is going, you could probably save some money and grab a great deal on a house in 1-2 years! For question 2, I would recommend 3 exemptions. 4 would be pushing it...but I would recommend that if you do choose 4, try and discipline yourself to save at least $20 in a savings account every pay period so that you have the money to pay what you could possibly owe next April. Trust me, you'll be glad you did and if you end up not owing as much, it'll be a great hidden stash of cash that you never missed! One great online bank is www.thebancorpbank.com They have great interest rates for small savings accounts, especially since interest rates at your regular walk-in bank stink.

You can also access www.irs.gov I believe there is a calculator or paperwork available that can help you determine more accurately how many exemptions you can state so that you can get as close as possible to your goal.

One word of advice...it's very tempting to think that one can "pay it later". Especially since April is only 5 months away. Sometimes we have the best intentions of wanting to "pay it later", but Life ends up throwing curve balls or tempts us with purchase choices that prevent money from being accumulated or allocated to where it should. Unfortunately, taxes are a given. Also, check with your employer to see if they offer a medical reimbursement plan and check to see when you can start contributing to a 401-k plan. Both of these are usually offered, and contributions are taken out with pre-tax dollars. This means that it lowers your taxable income. Every little bit helps. The great thing about the medical reimbursement plan is that over the counter (OTC) medications are reimbursable, whereas they aren't on your tax return. I hope this long blurb of an answer helps you out!!!! Good luck!

Answer 2

Regardless of your income, you can claim one exemption for every $3500 in planned deductions for 2008. Planned deductions are your total personal exemptions and the greater of your itemized deductions or standard deduction.

Using 2007 figures, if you don't itemize and you are single, your total deductions will be $8750 for the year. This translates into 2.5 exemptions that you can claim on your W-4 to break even. Since you can't claim the half-exemption, if you claim 2, then you should have a small refund. If you claim 3, then you should owe a small amount.

Since it appears that you don't have any dependents, you have to file as Single and not Head of Household.

Answer 3

Back in the mid '90's IRS had this brilliant idea that everyone should calculate the true number of exemptions to claim and to fill out the W-4 form worksheet. They presented it during tax season. I went nuts helping people with the form and trying to work through tax preparations. That worksheet is very cumbersome. I usually tell my clients to ignore it and ask what their objectives are with year-end reporting. (refund, break-even). So much for the IRS and their brain child.

Rule of thumb. If you want a refund, claim single and zero. You are not head of household because you do not have a dependent. You can claim 3 if you want--however, you are cutting it close and may end up owing. If you want to break even, claim S-2.

Good luck in this crazy working world!!!

Answer 4

You can claim whatever you want on your w-4, so long as you realize it doesn't affect your actual liability for the year. The W-4 form is not a tax document that goes to the IRS, it's only a document that alerts your payroll department as to how much you elect to have withheld from your paycheck each pay period. You can claim head of house, single, married even if you'd like, they all affect your withholding amount only, is all.


If you really feel that you will have the money to pay your taxes in April, better than now, than claim single, Exempt on your W-4, to have $0 withheld for federal taxes. Note: You'll still have taxes withheld for SSI, MEDICARE, and possibly state and local taxes.


If you them to withold something, but less than normal, claim single 7 or single 8, to have very, very little withheld.

But like u stated, be aware that you'll have to pay it all in the end of the year, in april anyway, unless of course you qualify for a refund anyway, in which case you'll be squared away quite nicely.

Answer 5

Use this calculator to help determine what to claim. I would not advise you to claim 3 exemptions as you may end up owing tax once the years out. And though it may mean a little bit extra money each pay check multiply that by a full year of paychecks and will you really be able to come up with that to pay the IRS at tax time?

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

Answer 6

Forget about head of household, you don't qualify, and wouldn't even if you were a homeowner but didn't have dependents. But you should be OK claiming 2, one for yourself and a second if you have only one job at a time, and still come out very close to even at the end of the year one way or the other - either very small refund, or very small payment.

Answer 7

If you're single with no dependents, you are not a head of household for tax purposes.