Question concerning W-4's- how many allowances to claim?

Question

My husband works.
I am a stay-at-home mom.
We have 2 children.

He makes anywhere between $35,000 to $40,000 annually depending on available overtime.

What are the different scenarios for different withholdings?

Answer 1

I'm in a similar situation. My hubby makes $47,000 and we claim 4 - hubby, me, and 2 kids. In my experience, you will have less taxes taken out from your paycheck each pay period if you claim all the members of your family. It may be different for you because I think you might be in a lower bracket. We've usually had $0 income tax, but this year will be different because we made more money.

Here's the withholding calculator from the IRS. http://www.irs.gov/individuals/page/0,,id=14806,00.html

You can always set up a mock tax return through Turbo Tax to see what your return will be. You can estimate the total taxes taken out at this point in the year because your hubby has more than likely already gotten all or all but one of his paychecks for the year.

Answer 2

That is a toughie. If one is making more money than you two do you claim much less or more? Either way.... on one hand you claim the max say 4 for the whole family and have a bigger paycheck. That money if stashed away can make one more as it is your account not the governments. So you pay the big tax bill later and come out ahead in the end.

Or you take fewer deductions and get some money back later. That way you are not hit w. a huge tax bill. It all comes down to the ability to save. On one hand it might be best to have more taken out during the year and get the big refund later to use for some major purchase.

At 35 or 40k I would put 1 on the form if you can live on that. Money not seen is money saved. Think of it this way. Say someone gives you $5000 and you deposit it. But you pretend that it does not exist in dealing w. bills and such. If you see it you are tempted to spend it and it just goes.

Point is claim the least deductions that you can and then stash the money away.

Answer 3

Claim 4 dependents for the year and you will either get a tax refund at the end of the year or you will pay very little. Claim less than 4, pay more tax now, but get a refund at the end of the year, every year. Some peole use that method as a way to have forced savings. Make sure you have deductions you can take at tax time to get your refund and reduce your tax burden. Property taxes and medical bills are good. Donations with receipts or cancelled checks are good also. Good Luck.

Answer 4

You can claim as many as you wish, as long as you have paid 90% of the taxes you will owe (if any) within the calendar year.

To be certain, go to the IRS website, and look under "Individuals" for the Withholding Tax Calculator. Given your situation, you're probably going to find out you can claim a lot more than 4.

Answer 5

Assuming that your children are 17 years old or under you will have approximately $1,700 in tax liability that will be reduced to zero by your $2,000 in Child Tax Credit. If that is the case you can claim most anything you wish on your W-4. The greater the number of allowances the less will be taken out in withholding each pay period. If you claim 4 allowances you should be fine.

Answer 6

maybe you mean 'dependents"? claim 4 now, and at the end of the year you may have to pay a small amount, but you will get more take home pay.

claim 1 now and get less take home pay but more back as a refund.

Answer 7

We have the same situation. I claimed half of my exemptions because I do not want to have to pay in. We do like to get a refund because we have started a tradition of having Christmas in January.