Am i claiming the correct amout??

Question

It might sound a little dumb of me to ask this but im not to sure what the difference is between claiming 0, 1 or 2 on my taxes. I'm not married no kids i make about 33K a year i have only 1 income and i rent, currently I'm claiming 2 but to tell you the truth i have no idea why lol am i doing the best thing claiming 2?? What would be different if i claimed 0 or 1???

Answer 1

Go to irs.gov and type in "withholding calculator"--then enter the information from your current pay stub.  The program will estimate how you are doing and will make recommendations.

Many singles are just fine with single/1 or single/2.  If you start making $40-$50K or have other income, then you may need single 0.

Answer 2

The lower the number the more taxes they take out.  

Answer 3

The higher the number that you claim on your W-4, the less they take out of every paycheck.  It's not just extra money though - if less is taken out, then your refund will be smaller at the end of the year, or you could have to pay instead of getting a refund.  It's the same total money, it just changes when you get it.

If you claim 2, with the circumstances you describe, you'll come fairly close at the end of the year, either owe a small amount or get a small refund.  If you claim one, you won't owe and will get a refund.  Claim 0, you'll get a bigger refund by the amount that was taken extra from your paycheck.

Claiming 2 is smart for you.  A big refund just means that you loaned your money to the government interest free during the year.

Answer 4

First let me say that no matter what amount you deduct from your paycheck, at the end of the year you will owe the same amount of taxes for your circumstances.

Basically the more exemptions you claim S2, S3, etc., the less money that is deducted from your weekly paycheck.  This gives you more money to spend or save during the year.  But be careful, if you don’t have enough deducted during the year, you may owe money at the end of the year.

My suggestion is to go by the amount you received as a refund or amount you paid last April.  If you had a huge refund you might want to claim more exemptions (S3 or more).  If your refund was too low or you owed money then you need to claim less (S1 or less).

Hope this helps!