Is it best to claim as many exemptions as you qualify for on your W-4?

You should claim the exemptions you are going to use on your tax filing at the end of the year, and then review your choices around October to make sure you are on track.

@YARNLADY so, as long as the exemptions that are on the W4 are exactly what we are allowed to claim, we won’t owe? Or is it better to not push the limit that closely?

There are too many variables to say whether you will or won’t owe, even claiming the correct number of dependents (like whether you own a home and/or can itemize deductions at tax time.)

When my ex and I were filing jointly with kids, I think we always claimed the correct number, minus 1 on the W4. We wanted the same as you, basically… mostly max out paycheck income, but still get a small refund. It worked, most of the time.

OK. So….
1 for my husband, 1 for me, 1 for each child… plus 2 for each child for the Child Tax Credit? (Is that how that works??) = 8. Is that correct?
If we were to do, say, 5, would that be okay? Or is that still not a guarantee?

I feel incredibly stupid, but I don’t understand this at all.

You need to read the instructions on the form very carefully. The withholding chart is approximate, and there are so many variables it is impossible for us to give an accurate answer here.

In my family, we use the long form with many different exemptions, so we claim much more than the one for me and one for him. Each family is different.

As I said, do a trial or sample filing in October and see if you are on track.

@YARNLADY well, it’s August, so if we change the W4 now, would it be pointless to check again in October? Or is that alright?

@DigitalBlue I don’t know anything about the Child Tax Credit. Is that something that everyone gets or what? I think I’m just as confused as you are, sorry! Maybe you should give H & R Block a call.

CTC
I have never paid attention to any of this before, because I’ve never had children to claim before. It’s on the 2012 W4, so… I’m guessing it applies?
I think I will just call in the morning. I am beyond lost. Thanks for trying to explain.

If you are going to change it then you would do 4, (1 for you, 1 for your husband and 1 for each child of the 2 children) but if you have a dependent child living with you at least more than half of the year and the other parent can not claim them then you can claim 1 more as head of household for a total of 5. However the question to ask yourself is.. Do you want the possibility of paying instead of getting a refund?? The whole idea of the W4 is so your employer can take out the right $$ for your taxes so you don’t end up owing money at the end of the year. So if you get a large refund at the end of year and want to see less of a refund and more in your weekly, bi-weekly or monthly check claim 1 for each of the childrent on the W4 but if you don’t mind how things are now keep it the same.

It is best to claim to exact number of exemptions so that you neither owe, nor are owed. But most people like a refund, so they overpay. It’s up to you. As to calculating the number of exemptions you need to minimize your refund, and make sure you don’t owe, that’s another story. The IRS has a form to help you. Or you can go to an accountant.

@DigitalBlue If you don’t want to pay in when you file your taxes play it conservatively. If you follow the instructions for the form it won’t withhold enough in most cases. But you can pay under $1000 usually without an estimated tax penalty federally. It varies by state. I can look up your state if you want.

It is really impossible to tell without knowing your full info. The answer depends upon whether you own a house, pay property taxes, pay medical expenses, have interest income, take the standard deduction etc. You also don’t know how the tax rates will change for 2013.
Since you don’t want to pay I’d go with 4 and hopefully get a refund in April. You’ll be close.

There are several site online that claim to help you decide. I would look at a few of those.

@YARNLADY I looked at about 100 of them, and I can’t seem to find an answer that makes me feel really confident.. so I’m thinking we will just leave the W4 alone.

Thanks, everyone.

As many jellies have mentioned above it matters on many other factors like if you can itemize, your property tax, mortgage interest, donations you have made, etc.

My husband and I usually change it year to year, adding a dollar amount to tweak it rather than deal with whatever the exemptions are. Maybe just take out your taxes from last year and change the line to account for the children. It shouldn’t be difficult to run the numbers when you have a form right in front of you already computed. 2012 tax forms probably won’t be drastically different than 2011. Then you can come up with the amount of taxes you will owe, and you can compare it to what is being withdrawn from your husband’s check. That’s what I would do. Or, ask my accountant.