Sunday, July 11, 2010

Filing single 1 exemption vs single 0 exemptions?

I have been filing single 0 exemtions throughout the year but was told by my employer that it can get more moeny back by filing single 1 exemption on my taxes? True or false?

Filing single 1 exemption vs single 0 exemptions?
During the year you can claim 0 exemptions. What you claim during the year determines how much your employer withholds out of your paycheck. When you file your taxes, you file single with 1 exemption. During the year, the lower number of exemptions you claim, the more money they withhold......which at the end of the year when you file your get more back. Some people claim less exemptions during the year so they won't owe as much on their tax form. Here's an example to help you understand this better.If you have 5 exemptions you claim during the year, your employer isn't going to hold much in taxes because you need it to live on. Then when you file your taxes, you will probably break even. But also be aware that a couple of years ago, the IRS said they would start penalizing people who got too large of refunds due to not claiming the correct number of exemptions on their w-4. ( The w-4 is the form you fill out at work to claim exemptions) This is a good question but you would be better off calling the IRS helpline to get a more personalized answer. Your income is an important bit of info for this question. Also, when you call the IRS, call them back with the same question a few minutes later. That way you'll know the answer is right. If you get 2 different answers from them, call again. Good luck.
Reply:The more exemptions you file, the more money you get to keep in your paycheck, BUT when you file your taxes, if they let you keep more than you owe...there's no TAX REFUND%26gt;%26gt;%26gt;YOU OWE!

I've filed single 0 and I'm married with two kids. It makes my paycheck a little smaller but at tax time I get a healthy refund. Everyone says that I'm letting the govt. use my money interest free and I could be investing it or something else. That may be true, but getting a refund back is like a nice bonus check every year and you get it in one huge lump. To me it's better to budget my life on a minutely smaller paycheck and get a nice check at tax time than it is to get meager amounts more per paycheck spread throught the year. It helps us put money back if we don't need it and we can use it for vacations, emergencies, etc.

I made the mistake of filing single with 1 exemption when I got married and had our first child. I did get to keep a little bit more money in my paycheck....BUT at tax time I got about $50 back from the State and OWED the Feds $1800. It totally was not worth it to me.

When you list your exemptions it just tells the IRS what scale to tax you against. If you could do it perfectly, it would balance out to $0 owed by you and $0 refunded by the government.

I prefer to get my nice check every year and budget my expenses around a slight smaller paycheck.
Reply:It is neither true nor false. It's the law. No filing 0 exemptions.
Reply:If you claim Single-0 you'll get the largest refund at tax time and the smallest paycheck on payday.

If you Single-1 you'll get a smaller refund at tax time, but a larger paycheck every payday.

If you claim Single-2 you'll get almost no refund at all or may even need to pay a few dollars at tax time but you'll get the largest possible paycheck on payday.

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