Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (13) | Ignore Thread Prev Thread | Prev | Next | Next Thread
Author: irasmilo Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121572  
Subject: Re: W4 Question on allowances Date: 8/7/2001 5:36 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
Pete,

Go ahead and claim the extra 2 allowances. The certification isn't that the number of withholding allowances is correct, but that the amount of withholding is correct within the leeway provided before you incur penalties for underpayment.

The difficulty arises because the W-4 uses shortcuts to approximate the amount of withholding required. Rather than have you accurately calculate your projected taxable income, you adjust your salary income by arbitrary units, known as withholding allowances, where each withholding allowance is worth $3000. For each additional $3000 of income you subtract one allowance and for each additional $3000 of deductions you add one allowance.

You can claim as many allowances as you need to accurately reflect your personal tax circumstances. For instance, it is not unusual for someone with a large mortgage and high real estate and state income taxes, medical expenses and charitable contributions to claim 4, 5, 6 or more additional allowances above the number of exemptions they will claim on their 1040. It is also common for people to claim negative allowances when they have significant non-salary taxable income and they don't wish to file and pay estimated taxes.

If you haven't already done so, you should at least look at the worksheet on page 2 of the W-4 to see if it applies to you. (Sometimes employers don't provide page 2. You can find the full W-4 at www.irs.gov if you need it.)

Ira
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (13) | Ignore Thread Prev Thread | Prev | Next | Next Thread

Announcements

Disclaimer:
In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
Foolanthropy 2014!
By working with young, first-time moms, Nurse-Family Partnership is able to truly change lives – for generations to come.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Macro Economics

Economic Implications of Cuba
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement