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Old 07-09-2013, 11:29 AM
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Question about number of withholding

My husband and I have 3 children all under the age of 6 and we both work. He is the bread winner and my job is part time (i bring home under $15k a yr). Last year we received $8000 total from state (MD) and federal. We want to get more back on our paychecks during the year opposed to getting a big chunk back at the end of the year but we DO NOT want to owe. In federal we got a little over $5k back. I went onto the irs.gov deductions calculator but it automatically does the standard deduction vs. the itemized one and we always itemize. The calculator said to claim 12 (we currently claim 5 on his and on mine i claim 1) and that we would get $150 back at the end of the year...that seems to be cutting it kinda close to me? but I dont know what i'm doing or how any of this stuff works. Just want more money to invest and spend during the course of the year. Thank you for any help



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Old 07-10-2013, 05:45 AM
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Join Date: Oct 2010
Posts: 5,231
"Just want more money to invest and spend ”????? Some people are so intimidated by everything tax related. They just feel better knowing that at least they won’t have to pay any more taxes at the end of the year. They are worried that they couldn’t pay their taxes if more was owing.However, as you can see, a tax refund should not be considered “free money”. If you do receive a large tax refund, you are essentially giving the government a tax free loan. If you usually receive a large refund, it would be wise to look at your deductions you have marked on your W-4 with your / your spouse’s ERs. If you /your spouse change your deductions and have less deducted from each check you could ALSO either use that on other expenses throughout the year or save it and use it to buy something like you use your tax refund.Also, some people use their refunds for things that they could not normally afford. It is fine in some cases to purchase these things, but if you do have debt, it would be wiser to put that money towards your debt.Also, if you e-file, it is possible to pay extra to get your refund faster. Look into the fees for this before doing it. In some cases, the fees associated with it will take a large chunk of your refund. So, although it is nice to receive that extra money in April, take a look at how much you do get back and see if it would be wiser to change your deduction.
NOTE:As long as you are getting a big tax refund and want to make adjustments to your withholding, it is really quite simple. you will need to visit your/your spouse’s HR representative and get a new W-4. The W-4 tells the company how much to withhold from your pay. Make the necessary adjustments to dependents in order to get the withholding to match tax liability from the previous year. The goal is not getting the number of dependents right, but getting the withholding right.



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