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Married, Filing Jointly
Estimated 2001 Income: $68000
Mortgage Interest: $12440
Real Estate Tax: $2131
Exemptions Claimed by both spouses: 2
Dependents claimed: 1
12-month capital gains (loss) claim: ($3000)
Interest gained: $69

I attempted the W-4 Calculation Worksheet at www.irs.gov and received 23
as the # of exemptions to claim when I next go back to work (2 payperiods remaining); when I did this in Quicken 2001 I received the number 14.

Question: What is best to claim? 14 or 23?

I really don't want much of a tax refund in April -- at the time I was employed this year I didn't claim the dependent (it arrived four weeks ago), didn't expect to have more than one period of unemployment and would prefer to owe a little money but recognize that's not going to happen as I'm changing # of exemptions very late in the year.

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IG,

I'm sorry that I can't help on your specific question, but I've heard something that you may want to look into.

I've heard that, when there are two incomes MFJ, the best way to have taxes withheld is to have only the larger income use the employer withholding. I've heard that this is much more accurate. I hope others can clarify this for us.

sunonun
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Married, Filing Jointly
Estimated 2001 Income: $68000
Mortgage Interest: $12440
Real Estate Tax: $2131
Exemptions Claimed by both spouses: 2
Dependents claimed: 1
12-month capital gains (loss) claim: ($3000)
Interest gained: $69


Additional information is needed to answer this accurately:

How much of the estimated 2001 Income (I assume this is wage/salary) is Husband? How much is wife? How much of each has been earned already?

How much income tax has been withheld from husband so far? How much from wife? How much is projected for husband for rest of year?

How much state income tax has been/will be withheld?

Will there be any childcare expenses?

If you used TurboTax to prepare last year's return, there is a good planning module for w-4 calculations built into it.

Ira

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irasmilo answered:
Additional information is needed to answer this accurately:

1.How much of the estimated 2001 Income (I assume this is wage/salary) is Husband? b. How much is wife? c.How much of each has been earned already?

2. How much income tax has been withheld from husband so far? How much from wife? How much is projected for husband for rest of year?

3.How much state income tax has been/will be withheld?

4. Will there be any childcare expenses?

If you used TurboTax to prepare last year's return, there is a good planning module for w-4 calculations built into it.


1. $43000 is spouse; $25000 is wife (what can I say -- I had a bad year. I'm sure I'm not the only US income earner who was laid off AND had to take three months unpaid medical/maternity leave).
c) $36500 earned already by hub; $21000 by wife;
2. Withheld from hubby: $5000 so far; withheld from wife: $4200; $840 more projected withheld from hubby's salary for rest of year.
3. No state income tax.
4. No childcare expenses for this year.
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sunonun offered:
I've heard that, when there are two incomes MFJ, the best way to have taxes withheld is to have only the larger income use the employer withholding. I've heard that this is much more accurate. I hope others can clarify this for us.

InvestorGrrl replies with some lament:
I've tried this. How I ended up being inaccurate is filling out W-4 forms at jobs where I don't count on being laid off two weeks after being hired and end up being laid off two weeks after being hired. I've had three interruptions in my 2001 work history -- for two of the three positions I've held in 2001, I've filled in a W-4 form where I had the larger income and asked for additional withholding. Unfortunately, for two of the three positions I've held this year, I did not have the opportunity to claim a dependent.
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1. $43000 is spouse; $25000 is wife (what can I say -- I had a bad year. I'm sure I'm not the only US income earner who was laid off AND had to take three months unpaid medical/maternity leave).
c) $36500 earned already by hub; $21000 by wife;
2. Withheld from hubby: $5000 so far; withheld from wife: $4200; $840 more projected withheld from hubby's salary for rest of year.
3. No state income tax.
4. No childcare expenses for this year.


Based on $68K salary, $69 interest income, $3000 L/T capital loss, 1 dependent, $14571 mortgage interest/RE tax, your taxable income will be $41798. If you have any charitable contributions, or deductible IRA contributions your taxable income will be less.

Under the old tax rates, your tax liability would be $6266. You've already had $9200 withheld and you expect to have another $840 withheld from your husband's pay. This will result in a refund of nearly $3800. You should submit W-4s to both employers with as many exemptions as is necessary to get your withholding to $0.

IMPORTANT!!! If you do this, you must recalculate your withholding allowances and submit new W-4 forms to your employers at the beginning of January, 2002, or you will have serious problems at the end of next year.

Congratulations on the new addition to your family.

Ira
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Ira:
Thank you very much. This is definitely the most useful reply I've received on the Tax Strategies board. It's late in the year but I'm going to do this anyway for the remainder of 2001 so I can have some holiday cash for gifts, IRA contributions, and donations.

InvestorGrrl
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For some reason I always find the W-4 worksheets more complicated than my actual taxes, probably because they give an answer in "exemptions" which are related to nothing. 23 exemptions, what does that really mean? So, instead, I always find it easier, and clearer, to go ahead and calculate my actual taxes (which is what irasmilo did). I like to remind people that you can do this any time of year - you don't have to wait for your W-2, or tax tables from the gov't. You will need to keep track of things, but that ends up saving you time when you go to file anyway. I usually do my taxes at the beginning of the year, at least once in the middle of the year, more if there has been some significant change (being laid off, maternity leave, getting a raise, etc.), and close to the end of the year. I am not recommendeing this for everyone, but it prevents surprises, let's me adjust things as necessary throughout the year, and makes filing my taxes a snap. So just a thought for anyone having trouble with the W-4 worksheets!

Kim
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