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Started By
Message
Claiming 1 vs Claiming 0 on taxes..
Posted on 8/25/16 at 11:51 am
Posted on 8/25/16 at 11:51 am
So I am pretty much ignorant when it comes to how to keep as much of my money in my hands instead of Uncle Sams...
How big of a difference is it for me to claim 1 then the current 0 I am at.
I prefer 0 because I like getting that nice chunk back at the beginning of the year, however I am getting anywhere from 37%-40% taken out for taxes... which is just absurd to me.
My question is if I go from 0 to 1 will the weekly increase in my net be more beneficial than getting less back after taxes?
I will clarify anything needed or give more information if I left out anything important.
For an example.
For last week I grossed $5017.00 in labor and was deducted $2,017.39 in taxes. aka 40% (40 ST hours 31 OT hours)
If I were to change from 0 dependants to 1 dependant (myself) how much difference would this make? How much would difference would it make at tax filing time?
Any and all insight is greatly appreciated.
How big of a difference is it for me to claim 1 then the current 0 I am at.
I prefer 0 because I like getting that nice chunk back at the beginning of the year, however I am getting anywhere from 37%-40% taken out for taxes... which is just absurd to me.
My question is if I go from 0 to 1 will the weekly increase in my net be more beneficial than getting less back after taxes?
I will clarify anything needed or give more information if I left out anything important.
For an example.
For last week I grossed $5017.00 in labor and was deducted $2,017.39 in taxes. aka 40% (40 ST hours 31 OT hours)
If I were to change from 0 dependants to 1 dependant (myself) how much difference would this make? How much would difference would it make at tax filing time?
Any and all insight is greatly appreciated.
8
Posted on 8/25/16 at 12:08 pm to 3andOut
Why give uncle sam an interest free loan when you can take that money and put it to work for you?
Switch to 1, take the increase in take home pay and put it in a Barclays dream account that gets you a whopping 1.05% interest. It is clearly more beneficial for you than not. That is 1.05% you weren't getting before.
Here is a calculator you can use to estimate the change
LINK
quote:
My question is if I go from 0 to 1 will the weekly increase in my net be more beneficial than getting less back after taxes?
Switch to 1, take the increase in take home pay and put it in a Barclays dream account that gets you a whopping 1.05% interest. It is clearly more beneficial for you than not. That is 1.05% you weren't getting before.
Here is a calculator you can use to estimate the change
LINK
Posted on 8/25/16 at 12:59 pm to 3andOut
There are specific rules that employers must follow for withholding. They are contained in Publication 15. The amounts to be withheld are based on information you provide via Form W-4.
You can compare the effects of an additional withholding allowance for your payroll period by referring to Publication 15-A.
You can compare the effects of an additional withholding allowance for your payroll period by referring to Publication 15-A.
Posted on 8/25/16 at 1:08 pm to 3andOut
quote:
For last week I grossed $5017.00 in labor
Brag is subtle
Posted on 8/25/16 at 1:13 pm to 3andOut
For last week I grossed $5017.00 in labor and was deducted $2,017.39 in taxes. aka 40%
Are you including insurance/retirement deductions?
Are you including insurance/retirement deductions?
Posted on 8/25/16 at 1:23 pm to Engineer
quote:
Are you including insurance/retirement deductions?
No that is just:
Federal
Medicare
Soc Security
Montana State Tax
Posted on 8/25/16 at 1:32 pm to 3andOut
quote:
Montana State Tax
Gotcha.
Posted on 8/25/16 at 2:35 pm to 3andOut
What you select has zero impact on Medicare and SS. I don't know Montana state taxes so I won't comment there.
Claiming 1 or 0 only impacts your Federal Withholding so that's what you need to be focusing on.
Claiming 1 or 0 only impacts your Federal Withholding so that's what you need to be focusing on.
Posted on 8/25/16 at 2:36 pm to lynxcat
quote:
Claiming 1 or 0 only impacts your Federal Withholding so that's what you need to be focusing on.
That is what I am focusing on. Was curious how much difference 1 dependant makes. If it $20-30 bucks a week its not worth the hassle to me. If its $200-$300 bucks a week I may be inclined to change my W-4
Posted on 8/25/16 at 2:57 pm to 3andOut
Just make sure when you get married and have a kid you don't claim 1 while your spouse claims 1.
That's 2 and when you file you only have 1.
We did this and got fuuuuuurked.
It was her fault if you ask me
That's 2 and when you file you only have 1.
We did this and got fuuuuuurked.
It was her fault if you ask me
Posted on 8/25/16 at 3:34 pm to 3andOut
You don't get any interest on the money you let them hold all year. I prefer to pay $500 to $800 (under the penalty and interest threshold) every year than get any back.
Posted on 8/25/16 at 4:04 pm to The Torch
quote:
We did this and got fuuuuuurked
That doesn't make any sense. You mean you got to keep more of your money all year, but had to pay some taxes when you filed?
The government is getting your $$ one way of the other, I'd rather keep as much as I can all year and then if I owe some just write a check.
Posted on 8/25/16 at 4:08 pm to 3andOut
quote:
If it $20-30 bucks a week its not worth the hassle to me. If its $200-$300 bucks a week I may be inclined to change my W-4
You can change it anytime you want throughout the year. I went from claming 0 to 4 this year.
Posted on 8/25/16 at 4:16 pm to lilsnappa
quote:
That doesn't make any sense. You mean you got to keep more of your money all year, but had to pay some taxes when you filed?
The government is getting your $$ one way of the other, I'd rather keep as much as I can all year and then if I owe some just write a check.
This. Your tax liability is the same regardless of how you fill out your W-4.
Posted on 8/26/16 at 8:40 am to 3andOut
quote:
however I am getting anywhere from 37%-40% taken out for taxes... which is just absurd to me.
Welcome to the real world
Posted on 8/26/16 at 9:18 am to 3andOut
quote:
That is what I am focusing on. Was curious how much difference 1 dependant makes. If it $20-30 bucks a week its not worth the hassle to me. If its $200-$300 bucks a week I may be inclined to change my W-4
Just make the change and see how much it impacts withholding. This takes 5 minutes in most HR systems. If you don't like it, then revert back. /thread.
Posted on 8/26/16 at 9:26 am to Poodlebrain
quote:
There are specific rules that employers must follow for withholding.
And I defer to you, PB, but when I was in private practice, bonuses were always withheld at the highest rate of anyone receiving the bonus. Many of us thought that was BS and that they were being lazy.
Do you have the skinny on that myth/reality?
Posted on 8/26/16 at 9:34 am to Ace Midnight
What I've experienced is that most HR systems aren't set up to pay bonuses correctly, or the HR people don't know how properly set up the tax with holdings for bonus checks.
So when you get a bonus, the system thinks that's your new income (extrapolates the the bonus amount will be your new comp each pay period) and then set the tax rate based on that.Dramatically overestimating it.
So when you get a bonus, the system thinks that's your new income (extrapolates the the bonus amount will be your new comp each pay period) and then set the tax rate based on that.Dramatically overestimating it.
Posted on 8/26/16 at 1:24 pm to Ace Midnight
Bonuses are covered under Supplemental Wages in Publication 15 that I linked above. Please note that there are special rules to cover people like you who are paid more than $1 million during a year.
Posted on 8/26/16 at 2:16 pm to lilsnappa
Ya that's pretty much it. Since most bonuses pay out in December we never worry about since you aren't really "losing" anything for long with taxes being filed 45 days later.
This post was edited on 8/26/16 at 2:17 pm
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