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November 18, 2008 7:27 AM   Subscribe

Taxesfilter: I'm trying to fill out a new W-4 to have less withholding tax taken out -- do I really have to fill out the worksheet thing, or can I just decide how many allowances I want?

This is actually a follow-up to an earlier question I had. A lot of people in here advised me that I was having too much withholding tax taken out of my paychecks, and recommended I adjust my W-4. Since I've been getting $300-$500 returns for the past couple years, I'm inclined to agree -- I've just gotten a copy of a new w-4 and want to add just one more allowance.

But there is that whole "worksheet" you need to fill out, and if I fill that out accurately, it doesn't appear that I am ALLOWED to take out that one more allowance. I can only claim 2 allowances in the main portion of the form (single, and head of household -- I am not married, I don't have dependants, I don't have kids), and the separate "if you are itemizing your deductions" worksheet actually doesn't give me any ground to claim that one additional allowance (I don't...have any deductions; in fact, the last time I tried to itemize my deductions, it worked out that it would make more sense for me NOT to and go with a 1040EZ return -- the only big adjustment to my income I can report on there is the annual IRA contribution).

Can I just go ahead and claim that 3rd allowance anyway? It would mean an extra hundred dollars a month to my income, so I'd REALLY like to get it. And I've been getting big returns anyway, so it's not like I'd be cheating anyone out of anything (if I have to pay at the end of the year, I would, really!)
posted by EmpressCallipygos to Work & Money (15 answers total) 1 user marked this as a favorite
The worksheet is just for you to figure out how many you want.
posted by Fuzzy Skinner at 7:47 AM on November 18, 2008

Pfff, sorry that was half a thought. You can just decide, you don't NEED to use the worksheet.
posted by Fuzzy Skinner at 7:49 AM on November 18, 2008

Actually, you can't be head of household if you don't have dependents.
posted by nasreddin at 7:53 AM on November 18, 2008

Be careful, though. It's a lot worse when you have too little taken out and have to pay a big tax bill come April. (This has happened to me.)
posted by languagehat at 7:57 AM on November 18, 2008 [1 favorite]

We take more deductions that the worksheet allows.

Keep in mind though that if you usually get $300 back, if you increase your monthly take home by $100, sounds like you're going to end up owing.
posted by dpx.mfx at 7:57 AM on November 18, 2008

I'd leave it alone. If you were getting $2000 back I'd say definitely make some adjustments. $300 to $500 isn't that much, and is a nice safety net against unexpectedly owing money in April.
posted by COD at 8:02 AM on November 18, 2008 [1 favorite]

You can put whatever on there. The worksheet is a guideline.

If you end up owing tax at the end of the year, you will have to pay quarterly estimated tax the year after that. It's kind of a hassle.
posted by ikkyu2 at 8:15 AM on November 18, 2008

$300-$500 in returns each year doesn't amount to an extra $100 per month of income. I'd say you'd be better off leaving it as is, because it really sucks to have to scrounge money for the big fat tax bill in April.
posted by Meagan at 8:15 AM on November 18, 2008

Actually, you can't be head of household if you don't have dependents.

I acutally used to think that, then I started getting extra checks from my state tax board for credits because "you didn't mark yourself down as head of household and you should have, so here's some extra money back."

I looked into it -- head-of-household doesn't depend on whether there are dependants. Head-of-household only means that you pay more than 50% of the costs of maintaining the house -- you could be single, have a roommate, have a spouse, whatever. In my case, having a roommate who doesn't chip in to the cable bill because he never watches TV is good enough for the IRS to call me "head of household," so I'm claiming it.
posted by EmpressCallipygos at 8:16 AM on November 18, 2008

I acutally used to think that, then I started getting extra checks from my state tax board for credits because "you didn't mark yourself down as head of household and you should have, so here's some extra money back."

Hmm, the IRS says it has to be a "qualifying person" (dependent child or relative). Maybe it's just a NY state thing?
posted by nasreddin at 8:49 AM on November 18, 2008

I think it might be just a state thing. I'm in MA; back when I was living with my ex, I claimed one dependent and filed as head of household. No problems. Ex leaves, I forget to re-submit a W-4, and get whacked the next April since TurboTax or whatever won't let me file as head of household anymore.
posted by xbonesgt at 9:01 AM on November 18, 2008

Your W-4 form is a signed legal document. You are not permitted to claim more allowances than you are entitled to. Have you noticed above your signature it says "Under penalties of perjury, I declare that I have examined this certificate and to the best of my knowledge and belief, it is true, correct, and complete."

You cannot claim to be head of household unless you are supporting related dependents according to the IRS. Your state rules may be different, but I doubt it.

You might try using this IRS online calculator to see if it changes your results. Note that it calculates your expected taxes and withholding based on how much you have already withheld and how much is withheld for each paycheck. It will enable you to take more allowances so that you have less than a $50 refund at the end of the year. You can run the calculator at various times throughout the year and submit a new W-4 each time to fine tune your withholding.

It sounds like you have a very simple return and your only income is from your single job. In that case the tax withholding should be pretty accurate assuming you use the standard deduction. Basically, your payroll department is using the same formula as you will be using when filling out your 1040, based on your allowances. You might check with your payroll department to see if they are correctly calculating your withholding.

$300 isn't a lot of money. If you are making $30,000 a year that is only off by 1%. If you kept that $300 in the bank for a year these days you would only be making about $5 in interest.
posted by JackFlash at 9:36 AM on November 18, 2008

> You might try using this IRS online calculator to see if it changes your results.

Seconding the calculator. It proved useful for me.
posted by WCityMike at 10:35 AM on November 18, 2008

You have to have "dependents or other qualifying individuals" to claim HoH. Qualifying individuals neither file their own taxes nor are claimed as dependents by anyone else. You may get away with doing this on your tax returns as spot checks won't necessarily turn it up, but sooner or later an integrity cross-check will find that you aren't actually claiming any dependents via their social security numbers, and you may get a whopper of a back tax bill.

Most advice about adjusting your withholding assumes that you routinely get refunded over $500 or so. [kiplinger]

I really wouldn't bother, especially given the $100/month change, which will end up being hundreds of dollars owed on tax day. You could do the method where you change your withholding partway through the year, but for this amount of money it isn't really worth it.

It does suck to be a single taxpayer and non-itemizer. Very few tax breaks for you. But it sucks worse to pay the penalty for under-withholding. In any case, review Publication 505's Getting the right amount of tax withheld.
posted by dhartung at 2:41 PM on November 18, 2008

The guideline that I read somewhere* was that if your refund** or tax owed is more than $700, you should adjust your withholdings; if less than $700, don't bother.

*yes, this is pulled out of my copious ass. there's a lot of room in there for data.

**the money you get back is your REFUND. the paperwork you fill out and send in each year is your RETURN.
posted by shiny blue object at 5:29 AM on November 19, 2008

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