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Author: APFamily Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121061  
Subject: Exemption Deduction in Quicken Tax Estimator Date: 11/8/2002 3:59 PM
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My wife and I use Quicken pretty extensively for managing our family's financial life. One of the tools I recently used was a 2002 tax esitmator at Quicken.com (http://www.turbotax.com/taxes/taxslashing/estimator/).

I project about $135K in pre-AGI taxable income. I am trying to estimate what our FIT will be using a few different scenarios. When I run the estimate assuming no deductions, and no 401-K/IRA contributions to lower AGI, the result shows $118K in taxable income, which is the difference between the $130K, minus the standard deduction (filing jointly) and something called and exemption deduction of $9K. Is this exemption deduction the same as the withholding deduction on my W4?

FYI: I have am taking 4 exemptions on my W4.
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Author: edcosoft Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 61996 of 121061
Subject: Re: Exemption Deduction in Quicken Tax Estimator Date: 11/8/2002 4:11 PM
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I can't follow your numbers but try estimating on a spreadsheet at http://www.edcosoft.com/qitc.html It's a lot easier to see what's happening because all the forms are on the same screen that can be split. ed


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Author: MarleysGhost Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 61998 of 121061
Subject: Re: Exemption Deduction in Quicken Tax Estimator Date: 11/8/2002 4:32 PM
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You are entitled to a $3,000 exemption for yourself, your spouse and any dependents for 2002. This may or may not coincide with your W-4. many people believe that the exemption line on the W-4 is really asking how many people are in your family. This is true really only for the most elementary situations.

Someone who has extensive tax deductions and credits may in fact show a higher amount for exemptions on the W-4. The W-4 is a tool you can use to make adjustments in your expected refund or balance due when you file your tax return, and so the more tax deductions, credits, etc you have, the higher is the justification for more exemptionson the W-4.

The exemption amounts on the tax return are strictly for the number of bodies that can be claimed either as personal exeptions (self or self and spouse) or as dependent exemptions.



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Author: lorenzo2 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 62000 of 121061
Subject: Re: Exemption Deduction in Quicken Tax Estimator Date: 11/8/2002 5:32 PM
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The numbers work (roughly) if your AGI is 135K, you take the standard married/joint deduction of just under $8K, and have exemptions of $9K. That would leave you with just over 118K in taxable income. You must have one child, since the "exemption deduction" of $9K would be exemptions for you, wife, and child. Not sure what you mean by "pre-AGI". As MarleysGhost said, there's really not much correlation between the "exemptions" claimed on your W-4 and the number of exemptions you take on your return.

Lorenzo

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