Can someone explain this tax rebate to me please?

[aces67]

Okay so last year we held out all year for 3 dependents. We will end up getting a refund of $4200 which the trustee will take. So I'm trying to up my dependents to keep all the money that I can. So far I'm up to 7 and they are still taking too much. I want to change it again but my question is do I figure in this possible tax rebate as part of next years refund?? I mean is it truly an advance on next year's income?? I don't want to end up owing the IRS.

Can anyone explain this to me?? We don't want to owe the IRS but we also don't want to give the trustee extra money that we could be using on other bills.

Thanks!
Amanda

[magyar123]

To your first issue: Complete a new W4 form with your employer and mark the box "exempt from federal withholding". Leave it like that for 3-4 months, no taxes will be taken out. Then complete anotherW4 with the actual # of dependents. With this you might come out even or maybe just owe a small amount in 2009, or get a small refund in 2009.
The stimulus act rebate has nothing to do with your current or next year's tax filing.

[lrprn]

Amanda, use this from the IRS to help figure your withholdings and control the amount of your refund - http://www.irs.gov/pub/irs-pdf/p919.pdf

There is an upper limit for dependents that once you hit it, it automatically pushes your tax return out for a closer look by the IRS. I can't remember offhand what that limit is, but it has been posted here in the forums before.

Hope this helps!