How many deductions should I claim on my paycheck?
When you first start a job, you fill out a W-4 form and choose how many personal allowances to claim, and then you usually forget about this choice. You might get married, have kids, and never change the withholding amount. So it’s good to remember that you can change your status at any time, and if anything changes in your life, you definitely should. Otherwise, you could either end up owing a shocking amount on your taxes in April, or you could end up with a jumbo refund, which means the government, instead of you, has been earning interest on your money.
The W-4 form comes with a worksheet to figure out how many allowances to claim, but you can adjust within those rules based on your specific circumstances. For instance, if you're single, you would claim two allowances on the W-4 form. But there are many more circumstances to consider -- if you have more than one job; if you’re married but your spouse doesn’t work; if you’re married and you both work, but one of you makes much more than the other; if you have kids; if you have additional tax deductible expenses that will affect your taxes; and so forth. You just mark down the numbers, add them up, and that’s the number of exemptions you should claim on the form.
by The Nest Editors
7/1/08
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