Comments on: Adjusting Withholding via W4 Exemptions

By: RPetitti

RPetitti — Wed, 29 Dec 2010 16:39:48 +0000

I’m wondering if my husband and I should both claim 0 allowances?
I make more and claimed 2 allowances, one for myself and one for spouse. However, when I completed the 2 earners worksheet it came out to 0 allowances and $550 to be withheld additionally for the year. I told my husband to put a 1 down for himself and thats it, so now it has worked out that he has more allowances then I do. Do you think we are withholding enough for when we fill jointly?

By: Jacque

Jacque — Fri, 22 Oct 2010 11:29:28 +0000

Is there a way to figure out the percentage of taxes that will come out on each of your checks per number claimed? Ex. Claiming 6 will put you at x percentage, claiming 4 will put you at x percentage. I would prefer not to have a large refund come tax time, I would rather receive more on each of my checks throughout the year.

By: mikestreb

mikestreb — Wed, 21 Apr 2010 13:16:31 +0000

I have seen someone use Married 25… She made around $60,000 and they withheld ZERO! She was pissed when I told her she owed $8,000.

By: mikestreb

mikestreb — Wed, 21 Apr 2010 13:15:12 +0000

I run a tax prep business and I saw A LOT of this. The IRS said that the ‘Making Work Pay’ credit confused a lot of employers and led them to withhold too little.

By: mikestreb

mikestreb — Wed, 21 Apr 2010 13:13:21 +0000

You are crazy (kind of like the nut job you referred to)… Good luck with that.

By: Jim

Jim — Wed, 21 Apr 2010 12:23:42 +0000

Withholding may not be required but you still need to make tax payments, or you’ll be subject to penalties and interest.

By: Melissa

Melissa — Wed, 21 Apr 2010 06:34:15 +0000

Wake up guys!!

ALL reporting and filing is Voluntary if you are an American Citizen. Yes, you heard me and I am not a nut job. Check out this IRS law: 26 CFR 31.3402(p)-1. It says that if you don’t need to file a W-4 if you don’t work for the government, and are not an alien. No reporting means no filing, no refunds and no tax payments!! IF you do this, there are several statements on the web ready for your signature under oath.

No one in the family has “worked” in years. Good luck to ya.

By: Bob

Bob — Thu, 25 Mar 2010 15:06:37 +0000

What she was saying is that $265 was taken for the year…not per pay period. I have the same problem. My wife claims zero, so we can have the maximum taken out….she makes $26,000 annually and they took out $810 for the year….now I owe a ton. Why does this occur? I thought the less you claimed them more funds that were taken out..is that not true?

By: Charles Garrett

Charles Garrett — Tue, 23 Mar 2010 14:52:48 +0000

10 is the max withholding allowances. Follow the instructions on the back of Form W-4.

By: Charles Garrett

Charles Garrett — Tue, 23 Mar 2010 14:51:07 +0000

I’m not a tax expert but I’ve done my own taxes all my adult life. If your niece’s husband claims her on his W-4, then she should not claim herself and her withholding allowance should be 0. If her husband does not claim her, she could claim 1 for herself which would mean less taxes taken out. If your niece is paid biweekly like most $265/pp = $6890 per year in Fed taxes which in my opinion is too much for a wage of $24K. She should probably only by paying half that at most. Then she needs to look at what is being taken out for state taxes if she’s in a state that has a state tax. That may need to be adjusted as well.

By: Bennea

Bennea — Sat, 13 Mar 2010 21:12:37 +0000

last year my niece made about 24000 and on her w4 she calimed mairried filing joint and 0.
Her company witheld a total of about 265.
Should they not be witholding more.

By: Gary

Gary — Sun, 29 Mar 2009 21:36:16 +0000

Are we allowed to use any number of exemptions? Or is there some limit to how many you can take?? -Gary

By: thomas

thomas — Sun, 11 May 2008 20:25:59 +0000

I’m in a totally different position. Both my wife and I claim 0 and we still owe money. My wife is a teacher so she gets paid pennies, and is taxed in the lower bracket. However our income combined puts us in the 25% so I have to make up that difference come April 15th. I’m wondering if buying a house will actually save me the hassle of owing money, of course i’d still have to find a way to afford a house where I live.

By: F2O

F2O — Fri, 09 May 2008 15:30:49 +0000

Since I was married last Spetember, we just had to figure all this out ourselves for 2007. We did exactly what Brandon explained. I claimed the deduction since I am the higher wage earner, and she claimed zero. We ended up just a tad short and had to pay a little over $100.00.
BTW, I used the IRS calculator and plugged in all my numbers (my 9-5, her 9-5, plus both of our side incomes from teaching). We also made our w-4 changes in mid Jan. 07 since we knew that we would be filing jointly for 2007.

By: fred@opc

fred@opc — Thu, 08 May 2008 23:17:55 +0000

This is just one example of how the IRS withholding system is downright silly. Why are we converting mortgage interest paid into withholding allowances at strange rates (like $3400 per). The withholding system was invented before the myriad tax deductions and credits were put into place, and it needs to be fixed. They tried to make something “easy” for the average joe and they actually ended up making it far more complicated.

What’s even harder to calculate than a deduction is the effect of a tax credit (like the child tax credit or adoption tax credit). In this case, the taxpayer must contemplate their marginal tax bracket to back into the right math for the allowances. The whole concept is worth a post on its own.

So why is the withholding system setup the way it is: The original idea what that people would get allowances for themselves, their spouses, and their kids. Since these things didn’t change much, it was simple, just to “set it and forget it.” Even though your paychecks went up, you wouldn’t need to adjust your withholding frequently.

Nowadays, we have mortgage interest, child tax credits, energy credits, yada yada yada (TurboTax claims there are over 250 to choose from). For most of us, our tax situation changes every year, and we’re forced to address withholdings AT LEAST once every 12 months and sometimes more often. In worst case scenarios, we end up owing a penalty or giving the US Government a sizeable interest-free loan.

Fred
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