Claim 1 or 2 for taxes after C7?

[LAKERHIGH]

Filing in the next 1-2 weeks (C7). I will hopefully be working construction in the next 1-2 months. If I give my full check to my mother (paid for college and attorney for me because I have nothing) every week, may I claim 2 on my taxes or will I have to keep it at 1 (which I always have)? She will only give me a tad each week because I owe her a lot. Thanks all

[HHM]

Are you talking claiming dependants on your W-4, or are you talking about claiming dependants on your Tax Returns?

[LAKERHIGH]

Delete

[LAKERHIGH]

Are you talking claiming dependants on your W-4, or are you talking about claiming dependants on your Tax Returns?

W-4 and/or Tax returns? Not sure if I do it on both or just one. I'm just confused

[HHM]

Well, paying back someone a loan does not make them a dependant, so from that perspective, you would not list her on your TAX RETURNS.

However, for purposes of your W-4, you can claim as many as you want up to 10.

(do a search for W-4 on this forum...we recently had a good discussion about claiming exemptions/dependants on W-4)

FYI. the W-4 is the form your employer gives you and is how they calculate your income tax withholding on your pay check.

[epiphany]

Well, paying back someone a loan does not make them a dependant, so from that perspective, you would not list her on your TAX RETURNS.

However, for purposes of your W-4, you can claim as many as you want up to 10.

(do a search for W-4 on this forum...we recently had a good discussion about claiming exemptions/dependants on W-4)

FYI. the W-4 is the form your employer gives you and is how they calculate your income tax withholding on your pay check.

Is that legal, HHM, to claim as many as you want up to ten regardless of whether you truly have those exemptions? I did this one year, when I was very young, and ended up owing a lot of money (well, what was a lot of money to me at the time) at the end of the year. I was then told by my family that it wasn't legal.

ep

[HHM]

It is "legal", but realize, by lowering your withholding (i.e. increasing your exemptions), odds are, you end up "OWING" taxes instead of getting a refund.

However, on your tax returns, you can only list those dependants you actually have.

[phoenyx]

Is that legal, HHM, to claim as many as you want up to ten regardless of whether you truly have those exemptions? I did this one year, when I was very young, and ended up owing a lot of money (well, what was a lot of money to me at the time) at the end of the year. I was then told by my family that it wasn't legal.

ep

I wanted to mention that although setting your withholding exemptions where you want is legal, to keep in mind that the IRS can assess a penalty for underpayment of tax. This penalty is often around 8%.

If you owe at least $1,000 with your return, in excess of what was withheld, the IRS can assess an underpayment penalty against you.

You are exempt from the underpayment penalty if you paid at least the smaller of: 90% of the taxable year's tax through withholding; or 100% of the previous taxable year's tax.

That is, in the scenario that you are filing your 2007 return by April 15, 2008, and:
* Your total 2006 tax was $5,000
* Your total 2007 tax is $20,000
* With your 2007 return, you owe at least $1,000
Then you would be exempt from the underpayment penalty if your withholding was at least 90% of the taxable year's tax (90% of $20,000 is $18,000), but you also get out of it if you paid 100% of the previous taxable year's tax (100% of $5,000).

You can also often have this penalty waived if you had a justifiable unusual circumstance that affected you including retiring or becoming disabled during the year or becoming married, and the underpayment was reasonable and not neglectful.

[CindyLou]

To the OP....if you are single with no dependents and no plans to itemize, then the proper filing status will be single and 1, or you will end up owing Uncle Sam at the end of the year!

[CATCHMEIFYOUCAN]

Just wanted to add my 2 cents. I'm single and usually claim ZERO, but last year I decided a different "trick," I guess I'll call it. I claimed NINE about several times throughout the year. Being a gamble I would use my winnings and pay the taxes off the WG forms I would receive after winning and even have them take out additional money towards taxes. Knowing I could offset my wins and losses, I actually came out ahead this year!

Best to all, Catchmeifyoucan

[imbroke2]

Is there someone (an accountant or tax expert) you can speak with? I have a friend who does our taxes-she's getting her degree in accounting and LOVES tax questions and things like that. When my husband started his new job, I consulted her about the number for dependents. She explained them pretty much to a point and we decided on a number. Of course we want a return at tax time, we don't want to owe, so we took what she said into account when figuring out what number to state.