Clarification?

Question

I am confused really, on my check stub it states exemptions/allowances and the number is 3. For some reason, I am thinking this is incorrect. Can someone help me as to clarify exemptions and allowances?

Answer 1

That's whatever you put on the Form W-4 on file with your employer. You filled it out and told them that. If it's wrong, file a new W-4 with your employer.

Answer 2

Here's an easy solution. Take your paycheck stub and visit IRS.gov. Enter withholding calculator into the search engine and use it. It will ask you information from your paycheck stub (as well as other income) and will do a quick calculation of whether or not you will get a refund or owe when you file in April. If you will owe, it will make a suggestion of how to correct the W-4 before December 31st.

The withholding allowances are designed to have the employer pull out the "right" amount of income tax from your paycheck. The classic number for someone who is single, takes the standard deduction and only has a paycheck is "2." This generally works if you have 1 job and had it all year. It stops working if you get married, have 2 jobs, have other income, etc.

As your income goes up, most people drop the allowances to 1 or 0. If you are married, have a house, lots of kids, then you can safely boost the number up. Each exemption being roughly the equivalent of $3K less of taxable income.

I leave mine at 2 and have $xx withheld every pay period if I've got substantial interest income or change it if I sold some stock....

Answer 3

Three is how many dependants you claim on your tax return including yourself.

Answer 4

call your human resources