Changes to W-4

[laurannm]

I've noticed that several people have recommended not making any changes to your W-4 until after your 341 (particularly increasing your exemptions in order to increase take-home pay). Others have said they increased their exemptions before the 341 with no problem. We typically receive a large refund every year, and on our schedule I we have for payroll taxes listed my current withholding at the time of filing, and then further below we listed our prorated anticipated tax refund. We've also correctly entered in our actual tax obligation on the means test (based on last years returns)

Since we already accounted for the tax refund, wouldn't I be justified to modify my W-4 so that I can increase my take-home going forward? If the trustee asks for a pay stub after filing, I should be able to explain it without any problem, given the large refund I typically receive, or maybe I am wrong?

Thoughts!

[Help!]

I think your reasoning is sound, as long as you aren't eliminating a mortgage payment in your BK. Your tax liability might be higher in that case because your mortgage interest deduction will be smaller when you file for your refund next year.

[laurannm]

Thanks Help

Nope, we are not eliminating any mortgage payments so our mortgage deductions should be the same. Our tax liability will be slightly higher this year due to a small increase in self-employment taxes and based on the trend over the past few years that our tax refund has dropped a few hundred dollars each year (primarily due to do small raises I have received). We've already accounted for the increased liability though on the means test and schedules.

[lrprn]

Most tax accountants will recommend that you (and spouse if you have one) adjust your withholdings so that you do NOT get a large tax refund each year. That's just giving your hard-earned money to Uncle Sam to use interest-free for a year - the gov't makes a lousy savings account. Better to save that extra money yourself in your own interest-bearing savings account to get the maximum benefit for your family.

[Cali]

I have been working hard to get ours even. This year we got 285$ back, which is better than 4k+.

[fltoo]

Use a tax calculator and plug in the withholding until your refund is zero.
Then adjust your real time withholding.

Question since I have not reached this BK paperwork yet. Is the paperwork based on your gross or net monthly income?

[laurannm]

BK paperwork is based on your gross income (with all of the various deductions taken from there)

[lrprn]

Question since I have not reached this BK paperwork yet. Is the paperwork based on your gross or net monthly income?

Bankrupty forms are based on your gross income.