exemption on W-4 form. What can I enter?

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I currently claim 3 on my W4 form and at the end of the year I get a huge refund because I pay som much in mortgage interest as well as interest on my equity loan. I’d rather have the money in my paycheck upfront than get a big refund at the end of the year. Can I change it to 5 or 6 to get more money in my paycheck? I know I would get a smaller refund or have to pay at the end of the year but I want to make sure that it’s legal to do so.
Also, is there anyway to figure out how much more money I would get for each exemption?

I want to claim 7 allowances, my payroll manager said that was an awful lot. She would not offer any “adivse” or help to determine the number. So am I crazy? Perhaps someone out here can help me out…

I am filing jointly.
I make $ 65000 with $ 7500 annual bonus
My wife makes $ 65000 with no regular bonus
No significant dividends, interest, etc.

Itemized Deductions:
$ 19000 Total Mortgage Interest for the year
$ 4600 Property Tax
$ 600 Ad Volerum Tax (My State’s “Birthday” Tax)
$ 6500 State Tax
$ 600 Charity
$ 600 Car Loan Interest (does this even qualify?)
$ 1000 Business Mileage (this was reimbursed, do I still use it?)
$ 1200 Health Insurance (this may be pre-taxed?)
$ 1950 My 401K contribution (this may be pre-taxed?)
$ 3250 My Wife’s 401K contribution (again might be pre-taxed?)
No Children

I am guessing whatever the magic number is that I would do that only one W4, and would claim 0 on the other form…
In response to the third reply:

I was under the impression that deductions were most definitely revelant to Allowances you would claim. Is this not true? Isn’t the point to claim enough allowances so that you are very close to what you actually owe at the end of the year after deductions and credits.

Also, I was about 99% sure the Car Loan, Mileage, 401K, and Health Insurance did not qualify. I just wanted to check.

  1. Reply
    v b
    February 15, 2011 at 1:46 am

    Go to IRS.GOV and play with the withholding calculator. Then you can max out your withholding allowances to your heart’s content.

    (Each allowance is worth roughly $ 3000 in income tax.)

  2. Reply
    February 15, 2011 at 1:46 am

    Suggest you up the allowances by 1 on W-4. Starting April 1, there will be less taken out of everythone’s paycheck.

  3. Reply
    February 15, 2011 at 2:34 am

    You can sort of claim what you want to even though you’re signing that what you claim is true and accurate. But you need to be prepared to pay tax at the end of the tax year rather than get a return. Some people who are good savers like to do it that way so they can earn interest on their money before giving it to the government. But if you’re wanting to claim a lot just so you can have more money in your pocket because you can’t save anything, it’s going to backfire spectacularly.

  4. Reply
    February 15, 2011 at 3:07 am

    Go to the IRS website and click n the withholdings calculator..it will tell you exactly how many you can claim and still be safe

  5. Reply
    Craig U
    February 15, 2011 at 3:45 am

    You should claim 2, one for you, and one for your wife. 401k and insurance are pre-tax. Reimbursed mileage cannot be claimed. Car loan interest doesn’t qualify, only mtge interest, student loan interest, and a couple others. Regardless, those are deductions, not allowances.
    Just follow the instructions on the W4.

  6. Reply
    February 15, 2011 at 4:09 am

    The deductions you are questioning don’t apply, you’re right. The others add up to roughly $ 31k. That’s around $ 20K over the standard deduction, which would translate to around 5-6 extra allowances. The problem is this – the withholding tables severely underwithhold for married couples who both have high incomes, so if you claim all those you are likely to owe a small fortune in tax, plus penalties for underwithholding, when you file your return. I’d go with somewhere around 3-4 total between you and your wife”s W-4’s, split however you want. Even that might not be totally safe, especially if you get hit with AMT and lose some of those deductions.

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