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Posted: 6/3/2008 3:59:25 AM EST
How many exemptions SHOULD I be claiming. Relevant data:

1. Married (spouse works)
2. Expecting a child (so we will have another deduction at years end)
3. Currently having taxes withheld at higher single rate (mistake I am fixing)
4. Mortgage - we pay a small fortune in interest every year

We have been itemizing since we got married (four years), and for '07 we had a couple thousand dollar return. I would like for the return to be much smaller in the future.

shooter

Link Posted: 6/3/2008 5:15:56 AM EST
Keep it like it is until you see what unexpected costs the little one is going to have on your budget. If you think shooting is expensive just wait until you get the baby equipment invoice. Then you will get a nice check from Uncle to put towards the unexpected costs put on the cards or towards future education needs. Good luck and congrats on the baby. As a father of 4, they are overall the true joys of my life. There is no other job that will give the same satisfaction as raising a child. Best Wishes.

SF
Link Posted: 6/3/2008 10:57:42 AM EST

Originally Posted By shooter220:
How many exemptions SHOULD I be claiming?


Check out the IRS withholding calculator

If you follow that, you'll still wind up over-withholding, but not quite as badly as if you just follow the silly worksheet on the back of the W-4 Uncle Sam wants you to over-withhold.

The first time I did this, I remember I looked up the taxes I expected to pay based on last year's tax schedule, and then I think I found a formula or something that let me figure my exemptions. These days, I usually just put 5 or 6, and I still wind up getting a refund.

If you're disciplined enough, go ahead and under-withhold (but not by too much!), and write 'em a check on April 15. I know it grates to write the check, but it's cheaper than the other way around!
Link Posted: 6/4/2008 5:07:08 AM EST

If you're underwitholding by a couple thousand dollars every year, well, that's like giving Uncle Sam an interest free loan every year. Since baby is going to be an extra, new deduction, you could probably change your withholding by at least two, poaaibly three, and still end up with a sizeable return. Then reevaluate next year.

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