Tuesday, May 11, 2010

What is the best deduction to take for a single parent on w4?

I want to be able to get the most money back each week. I make $10.50/hr. I also want to be able to get a sizeable refund also.What is the best deduction to take for a single parent on w4?
www.paycheckcity.com is a website that can help you calculate what you should have withheld to make sure that you are covered for your taxes, and also to help you determine how much extra you want withheld to get a refund at year end.What is the best deduction to take for a single parent on w4?
If you get more each week, then you get less as a refund - you end up with the same total money, it's just when you get it that changes depending on what you put on your W-4.

If your child is your dependent and under 17, you could safely claim 3 allowances and still not have to pay - probably even more would work. More than 3 would definitely work if you have more than one dependent child, and/or if you get EIC.
I always claim zero so they take more out of my paycheck. Then you will get more back at the the end of the year.
These two goals are incompatible. In other words, you can't get the most money in your paycheck and get a sizeable refund at the same time.

You have to pick one or the other. If you choose to get the highest take home pay you will have the least tax withholding taken.

If you choose to have a sizeable refund your take home pay will be less because you will have more income tax withheld every week.

For example, if you are single parent and take no exemptions more will be taken out weekly but at the end of the year when you complete your tax return you will have put in considerably more than what you will owe. You will have a refund coming but you had a smaller paycheck each week.

There is not a financial adviser alive that would recommend giving money to Uncle Sam so that he can hold it interest free for a year and then give you back your own money.

That being said there are some people that just can't save voluntarily so they look to Uncle Sam to do it for them.
If you are wanting a sizeable refund then your best option would be single and zero. This allows the government to take the most taxes out of your check and it means the more you will get back for a refund. The government will also be earning interest off of the taxes that they take out of your check if you do not mind them keeping your money for you until you file your taxes to get it back.

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