January 27, 2011,
C.S. asks from Racine, WI on January 26, 2011
Any Tax Savvy Mama's Out There...
I can never figure out how much we should be withholding on our W-4's. Currently we are Married/4...
Anyone know how you determine what is best for what salary so you don't end up owing $$?
K.F. answers from New York on January 26, 2011
I always make certain my W-2 is withholding the highest amount possible. I like to try to eliminate the possibility of owing the government anything and I enjoy the hefty refund too. I know I would just spend the money if it were in my regular check. I enjoy the extra cushion. With that said, I withhold at the higher single rate with 0 exemption allowances. This withholds the highest amount of tax possible but ensures I get a refund when I file my taxes since I usually don't have any additional income where taxes were not withheld. I hope this helps.
1 mom found this helpful
D.P. answers from Pittsburgh on January 26, 2011
Talk to your tax preparer. If you are get a large refund back, then your witholding is too high. If you owe every year, it needs to be higher. If you basically break even--you're in the right spot.
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E.K. answers from Minneapolis on January 26, 2011
I am definitely NOT tax savvy. But...!
I am married with two children. We always filed our W-4s with zero (0) dependents. That meant that more $$$ was withheld from our paychecks but that we got it back in a large lump sum as a refund after filing our taxes. And that was great for us. We have a hard time saving (and not dipping into the savings!) and we thought of this zero dependent plan as an interest-free savings account that was held for us by the IRS.
But times are tough. Until we get over the last hump of huge child care expenses (next year -- yippee), we found we needed a little bit more in our paychecks so we changed our W-4s to one (1) dependent. We get a little more cash in our pockets every other week and a smaller annual refund from the IRS. We do not end up owing
C.M. answers from Bismarck on January 26, 2011
irs.gov has withholding tables where you can look up your salary/wage and how often you get paid and use it as a guideline. Good Luck!
M.D. answers from Minneapolis on January 26, 2011
We are a family of 5, I do fulltime caregiver work and my husband is self employed. I claim 5, and last year we got almost $7500 back and no my husband didn't pay anything in (he does construction and the business is on the slow side).
L.M. answers from New York on January 26, 2011
The are many factors that go into answering that question.
Do you have a tax preparer (not H&R Block or one of those)? They can advise you as to your personal situation.
There are instuctions provided with the W4 form that will help guide you.
Are you getting back a large refund? One of the top 10 financial mistakes that people make are lending the government their money for free. So if you're getting a large refund, you may want to change to M/3, which will give you more in your weekly check.
Remember, you also have to keep in mind any types of income (like interest) that you receive where taxes are not being deducted.
N.R. answers from Des Moines on January 27, 2011
We've been married 42 yrs., have 2 adult children, have ALWAYS claimed zero exemptions, and ALWAYS got large tax refunds back. We never had to pay taxes. The fewer dependents you list on your W-4, the more money they take out of your paycheck for taxes, however, that results in more money with a larger tax refund. You have to decide if it's more important to you to have more money now and risk having to owe taxes later, or less money now and a refund later.