W4 Tax Form Question

[BrewCrewForever]

I am married and want to file my taxes next year jointly with my wife, can we both claim single and “0” on our W4’s? Or do we have to claim Married and “0”?

 

We had been doing Married and “1” the past few years and are getting tired of paying in each year. Appreciate the feedback as always.

[WV Brew]

You CAN file the W-4 as single as long as you don't file your taxes that way. You can also put in extra money (I do) above the zero deduction claim if you claim zero as married.

[brwrsfan]

I work at a payroll company, have for 10 years. So I'm 100% positive of this.

 

You can claim literally anything you want on your W-4. Makes no difference if you're married, you can still claim single and as many exemptions as you want. The only thing that effects is what tax table you're going to be using. If you don't mind me asking...how much are you paying at the end of the year? As WVbrew said, even with single zero it's still possible that you may owe at the end of the year (especially if you have a second PT job or something), so you may want to claim zero AND have an additional amount taken out of each check.

[JimH5]

I was under the impression that if you didn't have enough deducted throughout the year, that you would face a penalty when you filed the following April.

 

Not sure if that's actually the case.

[jjgott]

I was under the impression that if you didn't have enough deducted throughout the year, that you would face a penalty when you filed the following April.

 

Not sure if that's actually the case.

 

It's not a penalty, just you'd owe taxes at the end of the year. Withholding is basically a prepayment system.

[brwrsfan]

You can choose to not pay a single dime throughout the course of the year and then make one big payment to the government when you file your taxes.

 

Actually, some peolpe do it on purpose. The key is you have to trust yourself to not spend the money. Or make enough, have enough in savings to not worry about it. That allows YOU to keep the money normally for taxes in your bank accounts all year, collect interest from it and then pay them when it's due. Rather than give the government all the money and interest along with it throughout the year.

[whizkid]

You absolutely can't wait and pay everything with your tax return. Income tax is pay as you earn and if you under withhold and owe $1000 or more you will have a penalty. There is an exception if you had at least 90% of what you owe withheld or if you had at least as much withheld as the tax owed the previous year.

 

http://www.irs.gov/taxtopics/tc306.html

[Patrick425]

I was under the impression that if you didn't have enough deducted throughout the year, that you would face a penalty when you filed the following April.

 

Not sure if that's actually the case.

 

Yes, you can get penalized. My wife and I did a few years ago. I believe our penalty was something like $40. The marriage tax penalty basically got us. Since then I have changed my w-4 to add a fixed dollar amount to my tax deduction each paycheck.

[BallFour]

In my opinion coming from a CPA but not many years of experience yet. You say you don't like owing taxes come April. Its actually not such a bad thing because your basically getting an interest free loan from the government instead of giving them an interest free loan. At least that is how my tax professors explained it a couple years ago. Just make sure you have the money come April. But like others have stated don't just decide to claim 5 for no reason on your W4 you will get hit with a penalty.

 

Having both of you claim single won't do you too much because if you add both of your deductions it will come out to married filing jointly anyway. On page 2 you will notice there is a multiple earners section. I would advise you to fill this out with your spouse, it seems to be more accurate, no one ever really looks at page 2 but it can help a lot. And I would advise anyone to look because you don't want to owe too much nor do you wan't to be refunded a lot.

 

Hope this helps a little bit, ha.

[BrewersSuperCollector]

I file single 1, and I have 4 total dependents. I get back around 1k from state and 11k from federal. I know its an interest free loan, but I would just piss that money away every week on things we don't need. By having such a large refund it gives more the ability to do home improvements, put it down on a vehicle, or just plain save it. I wouldn't be so budget conscience otherwise.

[Patrick425]

I file single 1, and I have 4 total dependents. I get back around 1k from state and 11k from federal. I know its an interest free loan, but I would just piss that money away every week on things we don't need. By having such a large refund it gives more the ability to do home improvements, put it down on a vehicle, or just plain save it. I wouldn't be so budget conscience otherwise.

 

I'll try to be as kind here as possible with my comments, but it really pains me when I hear something like this. BSC, if the government (or any other institution) started a program today that offered you the opportunity to give them $1K a month and then, a month or two after the end of the year, they will give it all back to you (without any interest) would you sign up for that program? That is basically what you are doing. You do know that there are several institutions out there that will hold your money for you and actually pay you to do so, right? If you want, they will actually pull it directly from your account every month or two weeks, so you don't even have to think about it! Yes, I realize that interest rates are very low right now, but still...it's something, and for the amount of money you are talking about, I would take at least half of that and invest it, put it into my retirement, kid's college fund, something! The last thing I would do is let the government just hold it for me.

[hawing]

It sounds like BSC has found a strategy that works for him, though.

[Invader3K]

It sounds like BSC has found a strategy that works for him, though.

 

That's fine for some people...but I would agree with Patrick's general sentiments.

 

The ideal tax situation is to "break even" every year. No refund, and no need to pay in more. That means you keep every dime you need and keep it working for you, without having to come up with "extra" at the end of the tax year.

 

Edit: Also, you can in fact be penalized for knowingly underpaying your taxes.

[fondybrewfan]

I usually get a decent sized refund every year. I have my W-4 set up as married joint with 1 dependent which is my actual case. My wife doesn't work; I am not sure exactly how I am supposed to configure my W-4 so that I am paying in exactly what we owe, just claim more dependents even though I don't have any more to claim?. I am perfectly fine getting that tax refund every year because I like the trade off of knowing that money will be there for home improvements vs. getting less than $100 in interest income and possibly spending it on crap over the course of the year.

[Patrick425]

I usually get a decent sized refund every year. I have my W-4 set up as married joint with 1 dependent which is my actual case. My wife doesn't work; I am not sure exactly how I am supposed to configure my W-4 so that I am paying in exactly what we owe, just claim more dependents even though I don't have any more to claim?. I am perfectly fine getting that tax refund every year because I like the trade off of knowing that money will be there for home improvements vs. getting less than $100 in interest income and possibly spending it on crap over the course of the year.

 

Yes, I would add another dependent. If that puts you in a situation where you owe taxes, I would then use line 6 (Additional amount, if any, you want withheld from each paycheck) to try to get the net to as close to zero as possible.

 

I realize that money market, savings, and CDs are basically returning zero at this point, but I still don't think this is a good excuse to just let the government hold your money. Why not set up a "rainy day" savings account and put a fixed amount of funds in there each month? Again, you can set it up so that money automatically transfers from your checking into this account (similar to how the govt. automatically takes money from your paycheck each month). The purpose of the fund would be to pay for "unexpected" expenses such as car repairs, home repairs, medical expenses, etc. Then, you have the money for these items when you need it (not just when the government feels like returning it to you).

 

What kills me is that often people put the types of "emergency/unexpected" expenses I mentioned above on a credit card and pay 15% or more to the credit company for the use of that money, yet they have no problem letting the government use their money for no charge at all. Don't use the government as a savings account!!

[And That]

The IRS has a pretty nifty withholding calculator on their website (that is of course unavailable at the moment) if you're interested in how to get as close to no refund or payment as possible.

 

Of course you do need to guess about potential deductions and credits, so it's sort of a crapshoot and could be outright wrong if your situation changes significantly.

 

We got about $1000 back this year in our federal return (criminy), but had to pay almost that much into the state (hooray), so we broke about even.