I am not asking for advice in lieu of going to an accountant, but I wonder if anyone else has gone through this.
2005 was my first full year owning a home. It’s in San Francisco, so it’s expensive. Therefore, I had huge deductibles on my income taxes this year, and I am getting a juicy refund. All well and good so far.
I want to adjust my withholding so I will withhold enough less per week so that there will be only a small refund next year. I think I can do a better job of saving and investing my money than leaving it at 0% interest with uncle sam. So I hied me to payroll to change my W-4.
When I use the worksheet on page 2 of the W-4, it says I should take 10 deductions! :eek:
When I looked at the withholding tables available from the gov’t online, it seemed to figure out that I should take 5 deductions.
I’m playing it safe with 5, and after my next paycheck I should be able to tell if that was right. But I wish I didn’t have to play this game. Why is it so hard? And does anyone have a reliable way to figure this out (other than the trial and error approach that I’m already using)?
Same thing, same area. I did some quick calculations to figure out what I thought the withholdings should be and then used the IRS form to calculate what they suggested, numbers matched up.
I also wound up with a large number of deductions (something like 12 federal). Made me nervous so I ran my numbers again, looks about right (gives me an additional X dollars on each paycheck, and X is pretty close to last refund/12. Assuming that nothing dramatic changes in my situation that’s pretty close).
FWIW, I used the same form last year and came up with 7 or 8 deductions. (I’m in similar position, fairly big mortgage, recent purchase of first home, etc) I got nervous thinking that was a lot of exemptions, so I put 6 and forgot about it. I’m getting another big refund this year.
So, my lesson is, the form seems to give a pretty accurate read on what you should claim for exemptions. YMMV.