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Message
Should I change my W-4 mid-year or not?
Posted on 6/25/09 at 1:29 pm
Posted on 6/25/09 at 1:29 pm
I recently got married and have a newborn, but I haven't updated my W-4 yet. What are the pros/cons, if any, of changing it mid-year?
3
Posted on 6/25/09 at 1:31 pm to TigerFanatic1
Pros - you'll get more money back or owe less at the end of the year
Cons - Your loaning the govt interest free money if you do get a refund at the end of the year.
Cons - Your loaning the govt interest free money if you do get a refund at the end of the year.
Posted on 6/25/09 at 1:39 pm to TigerFanatic1
Are you claiming single and 0 right now? If so, definitely change it now.
There really are no cons because you can claim the dependants for the entire year. You may even want to claim extra dependants for the rest of the year to offset the higher withholding you've already put in and adjust it again at the beginning of the year to where it should be.
There really are no cons because you can claim the dependants for the entire year. You may even want to claim extra dependants for the rest of the year to offset the higher withholding you've already put in and adjust it again at the beginning of the year to where it should be.
Posted on 6/25/09 at 1:46 pm to Martavius
quote:
Are you claiming single and 0 right now? If so, definitely change it now.
Yeah, I am claiming single and 0.
quote:
You may even want to claim extra dependants for the rest of the year to offset the higher withholding you've already put in and adjust it again at the beginning of the year to where it should be.
People were telling me that if I change it now, they would make adjustments to compensate for the extra taxes I have already paid. With that being said I was a little leery of changing it until after the new year.
Posted on 6/25/09 at 1:48 pm to TigerFanatic1
You should definitely change your W-4 to reflect the change in your marital status and the additional personal exemption for the child. The tax brackets for Married Filing Joint may result in less tax for the same amount of income, so there is the possible benefit of less income tax due to getting married. The benefits of the newborn are definite unless your income is so great that you lose the benefits of the additional personal exemption and the $1,000 credit for having a child.
The real issue is not whether to change your W-4, but how to change it. Just changing you status to married and increasing the number of withholding allowances will result in reduced withholding, but it won't take into account the amount of overwithholding that has already occurred for the year to date. If you have a tax advisor ask him for assistance. He should be able to prepare a projection of your 2009 tax liability and compare it to your year to date withholding, as well as any for your spouse. From there he can determine how much you, and your spouse, need in withholding for the remainder of the year and fill out the W-4 accordingly.
P.S. Congratulations on getting married and having the child.
The real issue is not whether to change your W-4, but how to change it. Just changing you status to married and increasing the number of withholding allowances will result in reduced withholding, but it won't take into account the amount of overwithholding that has already occurred for the year to date. If you have a tax advisor ask him for assistance. He should be able to prepare a projection of your 2009 tax liability and compare it to your year to date withholding, as well as any for your spouse. From there he can determine how much you, and your spouse, need in withholding for the remainder of the year and fill out the W-4 accordingly.
P.S. Congratulations on getting married and having the child.
Posted on 6/25/09 at 1:49 pm to TigerFanatic1
quote:
People were telling me that if I change it now, they would make adjustments to compensate for the extra taxes
Not true. The withholding rates are basically static based on your status and number of dependants.
I've done the exact thing you're talking about mid-year.
Posted on 6/25/09 at 1:50 pm to Poodlebrain
quote:
The real issue is not whether to change your W-4, but how to change it. Just changing you status to married and increasing the number of withholding allowances will result in reduced withholding, but it won't take into account the amount of overwithholding that has already occurred for the year to date. If you have a tax advisor ask him for assistance. He should be able to prepare a projection of your 2009 tax liability and compare it to your year to date withholding, as well as any for your spouse. From there he can determine how much you, and your spouse, need in withholding for the remainder of the year and fill out the W-4 accordingly.
The withholding worksheet that goes with the W-4 is pretty accurate.
Posted on 6/25/09 at 1:58 pm to Poodlebrain
Thanks Poodlebrain and Martavius for the thorough explanation and the congratulations.
Posted on 6/25/09 at 4:32 pm to TigerFanatic1
Congrats. I second completing the worksheet. I'm not sure how much money you make (nor is it any of my business), but that will be the ultimate factor in deciding what your W-4 notation should be.
Posted on 6/27/09 at 8:47 am to seawolf06
I've never understood our gov't. Make a 50000 page tax code that no one, and I mean no one, can fully understand. Hold our money for a year, collecting interest, and then just give it back (sans interest accumulated). However, if you don't pay the gov't on time they can charge more than the rate considered "loansharking" in interest. When are we gonna collect interest on them holding our money?
Posted on 6/28/09 at 12:51 pm to BIGWORMK
i've cranked my exemptions up to like 12..I enjoy owing $3k at the end of year instead of getting MY money handed back after the government held onto it interest-free for a year.
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