How many witholdings should I claim on w-4?

Question

currently I claim 5 and get a check at the end of the year. I would rather get more monthly than lump sum at the end. according to w-4 worksheet I can claim 10 (1 for self, 1 for married and have only 1 job, 1 for spouse, 2 for dependents, 1 file as head of household, 4 which is 2 for each qualifying child for child tax credit). I will make somewhere between 48000-50000 this year. Also I have $2000 taken out of my pay for flex spending account. Total federal tax withheld so far is about 1400. Gross for last check was $2375 (slightly inflated because of overtime) and fed tax taken out was 129.84. YTD Gross is $26200. Is this enough info?

Answer 1

You cannot claim 10 -- you are double-counting!  You cannot do 1 for married with only 1 income and also 1 for head of household.  You cannot claim 2 for dependent children, plus 4 more for child tax credit.  There are only 4 people in this household: you, spouse, 2 kids.  Your max is 6 or 7 -- maybe (self, married w/ 1 income, spouse, perhaps 4 for 2 qualifying kids).  But that might cut back your withholding too much.

How much are you getting back at the end of the year?  More than $1000?  More than $2000?  Your taxes withheld so far this year only amount to 5.3% of your gross income.  That seems rather low at your income level.  If your tax refund last year (not including the special rebate! only the regular refund) was less than $1000, I would be very wary of claiming more deductions on your W-4.  If you do not withhold enough, you have to pay penalties and interest.  You do not want a tax bill at the end of the year, especially one doubled by penalties.

Answer 2

Wow, you are an audit waiting to happen!

Answer 3

You are misreading what you can claim.   You are either MARRIED or Head of Household--not both.

How big was your refund for 2007?  If it was over $2000 you can safely claim 7.  Suggest you only go up a little.  You can add more next year if it is warranted.

Answer 4

Uh, no, not quite - if you are married, you can't file as head of household.  

Divide the amount of your refund from last year by 525, and add that number of allowances.  If you get a partial amount like 3.7 for example, just take the 3 so add 3 allowances.  This assumes that nothing changed greatly from last year.

Answer 5

You can determine the exact amount that would be withheld from your paycheck by reading IRS Publication 15 and the similar publication for your state.

Make sure that you have a good idea of what your income tax return will look like for 2008 so you can plan appropriately.

Answer 6

Judy above is correct.  Each increase in allowances on your W-4 reduces your tax withheld by $500 or so per year. So if you got over $2000 back as a refund last year you can increase your allowances by 4.  You are almost correct on your calculations, except you cannot be both married and head of household (which generally means a single unmarried parent).  We have 4 children, my husband only works and we have 15 allowances (1 each for my husband and I, 1 for only 1 job, and we have 4 children so (4x3 for the child tax credit) 12 for our children. Each qualifying child gives you a $3400 deduction plus $1000 TAX CREDIT (which is $500 refund x 2!). Your W-4 allowances do not have to match your number of family members, it merely represents a percentage to be withheld.  Since the year is already half over, claiming 10 may be safe for this year, but reexamine your situation for 2009.

Answer 7

You can claim as many as you want as long as you put the correct number on your tax return and pay what you owe.  If you overstate your dependents and then cannot pay the tax at the end of the year there could be a penalty.