Can someone please tell me What Is Tax Exemption? I am individual, I need to receive more $ in my paycheck?

Question

is claiming exemption the way for me to see a larger paycheck. Please explain to me how excemption works.

Answer 1

You fill out a W-4 form for your employer.  If you follow the instructions it will tell you how many allowances to claim.  You'll break about even at tax time - not a large refund, but you shouldn't owe.

For each allowance you claim, you get a little extra in your paycheck.  Your refund at the end of the year is smaller by whatever extra you got during the year.  It's the same money, the only thing that changes is when you get it.

Answer 2

Tax exemptions are claimed on the W-4 form that should have been given to you by your employer when you started working there. The FEWER exemptions you claim of the W-4, the MORE tax comes out of your paycheck. So carefully review Lines A through H on the form, complete it and give it to your employer. Remember...only claim those exemptions that you are allowed to claim on the form, otherwise you might have to owe tax at the end of the year.

Here's the link to the form...

Answer 3

the more exemptions you claim on your w-4 the more money you keep in your paycheck but you get a smaller refund when you file your taxes.

the less exemptions you claim on your w-4 the smaller your paycheck will be b/c you're pay more taxes but you'll get a bigger refund when you file your taxes.

so i'll say at least claim 2 to be safe where you get a refund and get a nice paycheck and still don't owe the irs when you file your taxes,b/c if you don't have enough taxes withheld from your pay throughout the year you can wind up owing the irs.

so claim 1 or 2 but no more than that.

Answer 4

You are a tax exemption.

Your wife is a tax exemption.

Each kid is a tax exemption.

The more exemptions you claim on your W-4, the more money you will get in each paycheck - but claim too many exemptions and you will end up owing Uncle Sam come April 15th.  The best situation is to end up owing less than $1,000 when you file your tax return.

Tax exemptions are reported in box 6d on the front of your 1040 tax return.  On line 42, you take the number of exemptions and multiply by $3,400 (for 2007) and deduct that amount to calculate your taxable income.

So if you are married with three kids, you will have five exemptions on your tax return.  You should claim five exemptions on your W-4.  If you have lots of deductions, you may be able to claim 6 or 7 exemptions on your W-4 and still not have a balance due.

If you are single, you will have one exemption on your tax return.  You should claim one exemption on your W-4.  If you have two part time jobs, you may have to claim zero exemptions on one of your W-4's or you may owe taxes when you file your return.  Most single people with one job all year long can claim two exemptions on their W-4 and still get a refund.  If you claim three exemptions, then most single people would end up owing money.

The tax impact varies with each individual tax payer and their exact tax situation - because you could have three different people who earn the same amount but end up owing different amount of taxes.  Person One has lots of investments, so earns dividends, and needs to claim zero to pay for the extra taxes, while Person Two has a house and deductions, so can claim two exemptions, while Person Three has lots of kids and can claim exempt and not have any income taxes withheld because they do not owe taxes and get a child tax credit.