Federal Withholding tax?

Question

I got my first pay check today and noticed i was taxed around 25 bucks for this tax, however I looked at my friends paycheck and he was deducted nothing yet he and I are in the same circumstance (in college, live with parents, no kids, one job, no wife etc). I had a 0 under exemptions while he had 1, did I mess up or did he??

Answer 1

If you are a dependent, then claiming zero is correct.  If you are not a dependent, then you can claim one.

If he's a dependent and claimed one, he will very possibly have to pay when he files his tax return.

Answer 2

Neither of you really "messed up."  If only $25 was withheld from your paycheck then, you'll be getting all of that back when you file your taxes next year.

Also, remember that it's not your "circumstances" that matter -- it's the size of your paycheck that matters (generally speaking).

It would be better if you claimed "1" exemption on your W-4 form and not have any tax withheld at all (just like your friend did).  No need having to wait until next year to get your own money refunded back to you.

Answer 3

By you claiming "0" you have a better chance of receiving a refund next year when you file your federal tax return.  

And your friends refund will be less than yours.

I personally prefer to receive a bigger refund, because my auto insurance is due in April and I can full pay it with the refund, I would never save the money for the insurance payment of $3000.00 per year..

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