I am a single mother with two children. I have been claiming 7-9 exemptions on my paychecks so that the least amount of taxes are taken out. My children live with me full time all year round. I just want to make sure I will not get into trouble down the road. I usually get back a decent amount on Federal and owe 200.00-300.00 on State taxes.
2007-11-09 06:33:36 · 6 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ United States
What matters is how much you owe in taxes at the end of the year. You are generally required to have paid in between 100% of last years total amount due and 90% of this years tax due. As a pure money factor, if you have paid at least the amount you owe, you are not in violation of the law. Since you are getting refunds each year, this suggests that you are fine.
There is no "law" about exemptions. Some folks, like me, don't use exemptions...we tell the payroll department how much to send to the tax authories for state & federal withholdings (flat rate). All perfectly legal if you pay the correct tax amount by the end of the year.
2007-11-09 06:57:25 · answer #1 · answered by Anonymous · 3⤊ 0⤋
On a federal W-4, they're called allowances, not exemptions, and that's for a reason - you can take allowances for more things than just exemptions. That's why there are worksheets attached. For example, in your case you'd get a child tax credit for each child if they are under 17 - and the W-4 worksheet suggests 2 allowances for each of them for that unless your income is fairly high - that by itself would take you to 7. If you have other deductions or credits, claiming even more would be OK.
For the state, some states have a separate state form to fill out for allowances - you'd be wise to claim only 3 there.
2007-11-09 22:37:05 · answer #2 · answered by Judy 7 · 1⤊ 0⤋
This is not necessarily a low income issue. I am a single mother also, with one child. My exemptions then are technically 2, although I declare 4 exemptions on my check, or basically double. And I get a significant refund back at tax refund time. A lot of this has to do with writing off child care and being able to file as head of household. Plus, I get a good bonus every year, which is taxed at a much higher rate than my regular pay is.
2007-11-09 14:54:51 · answer #3 · answered by HEATHER 6 · 1⤊ 1⤋
Regardless of your income, you can claim one exemption for every $3400 in planned deductions in 2007. I believe that the number will increase to $3500 in 2008.
Also, since you should be eligible for the Child Tax Credit, you can take the total credit and divide it by your marginal tax rate to convert that into additional deductions.
As long as you don't owe more than $1000 when it comes time to file your taxes, there will be no penalties for underpayment of tax. There are other criteria for the underpayment of tax. However, they don't apply as long you owe less than $1000.
2007-11-10 08:21:31 · answer #4 · answered by Steve 6 · 0⤊ 0⤋
If I was your tax dude, I would say 3, maybe 4 if you want to take you standard deduction as one. Many states will throw in a penalty if you owe at the end of the year and your withholding was not uniform. I'm thinking the EIC is bailing you out with the fed. Many states have something for low-income families... Tell us your state, and we can help with more info.
2007-11-09 14:50:00 · answer #5 · answered by rob b 3 · 0⤊ 1⤋
Theoretically you should take 3 exemptions-you and 2 kids. Your large refund explainable only because you probably have low income rpobably about 15-20K. I would say the golden rule for me at least: number of exemptions on my W4 for payroll taxes should equal number exemptions on tax return. You don't have to follow it. This is just for me, but I think it's wise if no other income is earned additionally.
2007-11-09 14:45:38 · answer #6 · answered by alikmal 2 · 0⤊ 2⤋