Should I change my W4?

[scooter64dog]

I will likely file C 13 very soon and have many questions, but this is one of the first. I currently have my W4 set as "Married" and claim 0 dependents, because it was more beneficial to do so in prior years. Of course that means that I get less from my paycheck from work, as it's being withheld.

So my question is, should I change my withholdings to claim 2 (or whatever), or should I leave it as is? Does it matter when they are determining my disposable income?

[liz417]

Do you get a large refund every year? If so, yes I would adjust it to balance it our to zero because the Trustee can take your tax refund (our district does that, so check with an attorney).

Good Luck!

[scooter64dog]

Thanks for responding so quickly. I've gotten decent refunds the past few years, so my question would be - does it matter if I adjust the W4 so I get back more monthly (won't that just make my monthly payment to the trustee higher?) or should I leave it as what it currently is, "0" so monthly I have less?

[liz417]

I would change it and then pad your expenses a little more. I'm sure you forgot things on your list, things that aren't purchased every month like: eye wear, subscriptions, medical, entertainment, etc. I think it's easier to "find" things to put on your expense than to hand over that tax refund to the Trustee.

[gettingby2008]

We were told to keep our exemptions at 0 and once the plan is confirmed we can adj to give a little "extra" as long as we will not owe taxes at the end of the year by making the adj.

[Flamingo]

What we did after we filed was adjust our exemptions to ensure our refund would be very small or we would have a small amount to pay. Prior to filing, we had a lot of deductions which will disappear for most filers after filing and you will end up filing a 1040A for several years, taking the standard deduction if you itemize, because you probably will not have enough deductions to go over the standard deduction in the next several years thereby reducing any refund or causing a balance due.

[chloe0724]

We also changed our deductions after filing. We have to give over all but 250 of any return we get for the next 5 years. Better to keep it as close to 0 as possibkle

[reener]

coming from a tax pro and previous bankruptcy filer

first, you seem to understand that "0" means you get more tax deducted from payroll check every week but may come out with a bigger refund.

I agree with a previous reply that said you should file married plus dependents so if you have one dependent plus your spouse you should be filing for THREE (3) exemptions.

This way you will get more money per month just adjust your variable expenses to account for this additional money because any refund you get would be subject to the bankruptcy court demanding all of it. You will need to do this while in bankruptcy so you have a little of a cushion anyway.

There is no reason to give the government a tax-free loan on your money until tax refund time anyway. This is never a good filing when you claim 0 exemptions for 90% of people unless you owe a debt to the IRS and want to pay it out of your refund (which I still dont suggest except for people who are terrible bill payers, installment plan would be preferred!)

[scooter64dog]

Thank you so much, everyone for your advice. I'm definitely going to change it.

This is such a bittersweet process. Started my own business with such high hopes... only to have it end like this.

[reener]

You are not alone

all you have to do is watch the news...

Good luck and feel well

[epiphany]

What we did after we filed was adjust our exemptions to ensure our refund would be very small or we would have a small amount to pay. Prior to filing, we had a lot of deductions which will disappear for most filers after filing and you will end up filing a 1040A for several years, taking the standard deduction if you itemize, because you probably will not have enough deductions to go over the standard deduction in the next several years thereby reducing any refund or causing a balance due.

Flamingo, is that legal? To claim more exemptions than you have throughout the year? I understand the game but was always under the impression that this was illegal. So many people do it, I could very well be wrong but I would just like the answer to this once and for all because I have been wondering about this for years.

I did this once way back when on the advice of someone and ended up owing money that I could not readily come up with so I never ever did it again.

ep

[chloe0724]

Epiphany,

You have to make sure you're exemption amounts will come as close to breaking even as possible. IRS.gov has a calculator to help you estimate it. It's not illegal. It's just gaging the amount that is withheld from your check to aviod overpaying the IRS.