Tax Witholding

[UVa2005]

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Hey Everyone,
I am about to start residency in July. I am married and my wife works as well. We do not have any children. I was wondering how much witholding (dependents etc) we should claim in order to get the most out each month but without having to pay a lot at the end. We will also own our home so we will have the tax credit at the end of the year. Thanks for your suggestions!
😕

 

[beriberi]

Hey Everyone,
I am about to start residency in July. I am married and my wife works as well. We do not have any children. I was wondering how much witholding (dependents etc) we should claim in order to get the most out each month but without having to pay a lot at the end. We will also own our home so we will have the tax credit at the end of the year. Thanks for your suggestions!
😕

Luckily, there is a handy IRS worksheet for this. Unless you are contemplating adopting, you don't choose how many dependents to claim. You can choose extra witholding if you like. If you are buying a house, it may not give you a tax break for 2005, as you need 9000 of deductions to itemize (and many don't pay that much interest in 6 months).
It seems most people end up getting a pretty big refund at the end of their first year (though mine was smaller as my spouse in non-med, and therefore we are less broke).

 

[UVa2005]

apparently - you can claim dependents even if you don't have them. I am not sure how this is legal - but that is how you get more money back each month. I have been told to claim at least 2 dependents - anybody know about this?

 

[GeneGoddess]

The w4 is just a worksheet. I was listed as "single" for about two years before I changed it to "married, withhold at higher single rate". You can list as many dependents as you want (on the w4). HOWEVER, if you list a bunch (and withhold very little from your paycheck), you will owe a bunch when you file. I would rather owe than get a refund (I would rather invest the money myself than give the gov't an interest free loan), BUT you can be fined if you owe over a certain amount (like $1000). So, claim as many dependents as you like on the w4, but remember that you can't owe the gov't more than $1000 (some exemptions) on Apr 15 without having to pay a fine.

 

[TigerPath05]

I also have a question about this. I have been trying to find this info by googling, but no luck. My husband & I are pretty much in the same situation as the origianal poster, married, both work, 0 kids, own a house. I did the IRS W-4 deduction calculator & it tells me in order to have enough taxes taken out we both have to claim "0" and he needs to have $20 extra taken out per paycheck & I have to have an extra $10 taken out per pay check & we need to select "married". Does anyone know what difference it would make if we both selected "married, but withhold at a higher single rate"??????? Please help I don't want to get stuck paying $2000 at the end of the year like some of my friends did.

Thanks!

 

[GeneGoddess]

My spouse and I both have "zero" and "married, withhold at higher single rate" and end up breaking about even (refund or due approx. $500). There is a chart somewhere at irs.com that should break everything down.

 

[Shah_Patel_PT]

If you start paying off your loan, how much loan amount can be deducted each tax year??