Taxes, specifically W-4 help

[Guest db99wj]

Anyone got a good knowledge of taxes and whatnot?

[Fallguy]

I'm no expert by any means...but what is it you need to know?

[Guest db99wj]

Due to having 4 kids, married, filling jointly, when I fill out the W-4, I can come up with 14 allowances, I chose to only use 11 and when I got my paycheck yesterday, no fed income tax was taken out, asked bookeeper why, she said you have so many allowances.

I don't like paying the IRS too much money, but I would rather get a little back at the end of the year instead of paying. I don't like the idea of not having any money taken out of my paycheck to go to the fed.

Just for the sake of info, I have mortage, propertey taxes, lots and lots of child care expenses and even gave a little to charity.

Not sure how I should do it, keep it like I had it last year, a little money went in and I am getting a little back this year. Oh, and the 4 kids, one was born in Oct. 2007, that is why I adjusted my number of allowance up from 2007 (I had 9 on last years form)

[molonlabetn]

You can opt to have a specific amount taken out of each paycheck... if your income is fairly stable year-to-year, then it's simply a matter of dividing your tax liability plus the amount you'd like to get back, by the number of paychecks you'll recieve.

[HanSolo]

Actually, the best thing you can do from a Financial Planning aspect would be to leave it the way you have it now with nothing being taken out and sent to the Feds. Then take one of last years returns and see how much you were paying and put that amount of money in a savings account every pay check. Then at the end of the year, if you have to pay some out, you will have it in that account. In the end, you will end up better off because you will, at the very least, have gained interest on that money.

[Fallguy]

Several years ago I didn't have any tax taken out of my check, but still got a refund because of Earned Income Credit. I have 3 kids and didn't make much at the time and the wife didn't really make anything. So just not having any tax taken out is not bad in-and-of-itself.

If your income is pretty much the same every year and your deductions are the same, it should be ok.

If you want them to take some out to be safe and simply get it back as a refund if you didn't have to pay it in, you can fill out a new W-4, they should be able to give you one at work or you can get it here and either claim fewer exemptions (you don't have to claim all you can) or have them withould a specific extra amount.

[mac12]

If you owe the IRS more than $500 at tax filing time they will want you to make quarterly deposits for the next tax year. If it goes over that amount the second year, it will be a penalty. You have to adjust your withholding to stay under that $500 or pay a little more to get some back. But why would you want the gov to use your money interest free? Just my .02.

[Fallguy]

If you owe the IRS more than $500 at tax filing time they will want you to make quarterly deposits for the next tax year. If it goes over that amount the second year, it will be a penalty. You have to adjust your withholding to stay under that $500 or pay a little more to get some back. But why would you want the gov to use your money interest free? Just my .02.

Thanks mac12, I knew there was something about paying quarterly, but didn't know the details.

[The Rabbi]

Actually, the best thing you can do from a Financial Planning aspect would be to leave it the way you have it now with nothing being taken out and sent to the Feds. Then take one of last years returns and see how much you were paying and put that amount of money in a savings account every pay check. Then at the end of the year, if you have to pay some out, you will have it in that account. In the end, you will end up better off because you will, at the very least, have gained interest on that money.

Yup.

And now our wonderful gov't is sending money to people who don't pay taxes. So it's a win-win.

[fury2neon]

Actually, the best thing you can do from a Financial Planning aspect would be to leave it the way you have it now with nothing being taken out and sent to the Feds. Then take one of last years returns and see how much you were paying and put that amount of money in a savings account every pay check. Then at the end of the year, if you have to pay some out, you will have it in that account. In the end, you will end up better off because you will, at the very least, have gained interest on that money.

+1 to that. As long as you owe no taxes from last year keep it the way you have and follow Solo's advice on investing.

[dunndw]

Yup.

And now our wonderful gov't is sending money to people who don't pay taxes. So it's a win-win.

It's even better when they DON'T "give" any of it to the people who run their own businesses. No W2...no money.

I get a warm fuzzy feeling every time I think about it...but that might be the tacos

[Smith]

In the same situation and have been told that If you claim more than 9 allowances it flags you for more scrutiny by the Gestapo. I always claim only nine, as to not give them any incentive. As smart as it is to save that money independently, I am not willing to play games with the IRS/Gestapo. They will win, and like the Clinton's, they can change the rules when it is convenient to make sure they do win.

I've been audited twice, randomly of course!