How Many Allowances Should I Put?

Question

I am single with no dependents and I applied for a job with my sister and she told me that I had 3 allowances but when i got my first check my mother told me that it was wrong and I would end up owing money at the end of the year. What should I do?

Answer 1

Go to PayCheckCity, enter your data, and it will compute your withholding allowances for you:

http://www.paycheckcity.com/W4/w4instruc...

Answer 2

It depends how you want to handle your money. If you claim 3 allowances and invest the extra money from your paycheck, you will be maximizing the power of your money. Why let the government hold your money all year long? Ideally, you end up at zero or owing a very small amount. The fewer allowances you claim, the more money they withhold from your pay. The safest way for you, in my opinion, would be to start out at 2 allowances and see how the numbers work out at the end of the year. Alternatively, you could use Turbotax or other tax preparation software to project what you will probably earn for the year and adjust your withholding based on what you come up with from those projections.