When should we change our Federal Tax withholdings

[sophia]

We got back 5k this year which is about $400 a month and we really need some of that income coming into the house.

We had our 341 first week of June & all seems to have gone well.

I am a SAHM and we have two little ones and my spouse claims Married and 0.

I'd like to change it to Married and 2 to have more monies coming in and still get a little at the end of the year. I have read that the TT won't take the child exemption amounts so I think this is a good idea?

Thoughts?

TIA


Oh yeah... we asked our Lawyers paralegal and she said we could do it after the 341 but did not seem to sure of the answer KWIM?

[JRScott]

You should be fine to change it now. No real need to loan the government that much of your money each month interest free.

[bnkrptinva]

I have a suggestion for you..take it for what it's worth.

Figure what your taxable income should end up being for this year. Go to the irs site, and even if you have to use 2008 figures, figure up your tax you will owe.

Subtract what you have already paid.

Divide that amount by the amount of checks you will still receive for the year.

Then

Check out this website:

http://www.paycheckcity.com/netpaycalc/netpaycalculator.asp

Play around with the exemptions, also plugging in any other deductions you have out. This will show you how much you can bring home, and if you are paying enough tax.

My personal suggestion, don't pay too much over...instead, whatever amount you "don't need" for bringhome that you would get as a refund, put it into a savings account and earn interest. Why let Uncle Sam have your money for his own use during this time?

After your 341, you should be able to make your adjustments, and put money aside without it being taken by the trustee.

If I'm saying the wrong thing here, someone please chime in and correct me on that though.

[sophia]

Thats how I feel! Why am I struggling here if we could have the monies coming in and at the same time not loaning our money for free.

You should be fine to change it now. No real need to loan the government that much of your money each month interest free.

Thank you for the link!

I have a suggestion for you..take it for what it's worth.

Figure what your taxable income should end up being for this year. Go to the irs site, and even if you have to use 2008 figures, figure up your tax you will owe.

Subtract what you have already paid.

Divide that amount by the amount of checks you will still receive for the year.

Then

Check out this website:

http://www.paycheckcity.com/netpaycalc/netpaycalculator.asp

Play around with the exemptions, also plugging in any other deductions you have out. This will show you how much you can bring home, and if you are paying enough tax.

My personal suggestion, don't pay too much over...instead, whatever amount you "don't need" for bringhome that you would get as a refund, put it into a savings account and earn interest. Why let Uncle Sam have your money for his own use during this time?

After your 341, you should be able to make your adjustments, and put money aside without it being taken by the trustee.

If I'm saying the wrong thing here, someone please chime in and correct me on that though.

[Amy26]

I actually claim 8 ... I prefer to get more per month. You can do up to 10 without raising an eyebrow. I was doing fine with it since I owned a house. The tax break from the house offset me having to owe anything back from using 8. Now that I have filed bk and I won't have the house anymore... I may have to adjust it. Course, I'd rather get more per month and then owe them come tax time then pay them too much and get a refund once a year.

[sophia]

I just used that calculator (w4 )and it says we should claim 8!

I can not even convince my husband to claim 2 !! LOL

I need to sit him down and explain it all to him better.

[Amy26]

Eight is great! Its my lucky number....hehe... you can pull up the info about it on the web but up to 10 is perfectly fine. Also paycheck city is pretty accurate on calculating net pay... as long as you put in the deductions properly. It calc'd my salary out for me within like 30 dollars.

[bnkrptinva]

It's good to use those pay calculators each year or as anything changes in income, deductions, headcount exemptions.

I started my year out as S-1, as that was my status. Once I had my 341, I reworked it, as I'm expecting and baby comes this year, so I am now going to be HOH-2...and have overpaid so far with that in mind. Once baby gets here, and my insurance premiums go up, I'll need to see how I need to adjust yet again to try and break even.

Then there's a shot I'll be legally marrying husband (is husband to me now), then it's crazy, cause it turns into married filing jointly w/3!

As soon as he finishes school, and goes to work, I'm back to married filing sepearately - 2. He'll file his own so I'm not held liable for his student loan.

My point is, use the heck out of those calculators, get as much as you are entitled to along the way, break even at the end...if you have excess...put in the bank and earn interest, and then you won't fret if an emergency comes up, you'll have some savings available to cover it!