w4?

[gyselle 4]

Hi all.

I am starting a job soon and was wondering about the W4.

Questions C states: Enter “1” for your spouse. But, you may choose to enter “-0-” if you are married and have either a working spouse or more

than one job. (Entering “-0-” may help you avoid having too little tax withheld.)

I am confused. Is it better for me to put 1 or 0? I have a spouse.. (1?) but sounds like 0 might be a better option to help avoid having too little tax withheld?

I heard there is a penalty for having too little tax withheld?

[VanessaTony 3,567]

If you put 0 you will have the most tax taken out, if you put 1 you will have less taken out.

The more tax you have withheld the more likely you are to get money back when you file your tax return.

There isn't a "penalty" for having too little taken out, but if you don't get enough taken out compared to your household income then you may end up with a tax bill to pay (and I love getting refunds instead).

My husband and I put "0" on all of ours to make sure the most is being taken out.

**Edit - sometimes families with only one income, and with that income being low put 1 or however many to have less tax taken out because they need that money to live on on a daily basis. My husband and my income is sufficient to live on with the "most" tax taken out so that's why we keep putting 0. If I stopped working and had a baby we might do something differently.

Edited October 9, 2012 by Vanessa&Tony

[Reyan 56]

I guess I see the refund you get back as a 0% interest loan to the government. Now if the government gave me my principle + interest on the refund, then I wouldn't mind lending uncle Sam the money. OP I use the following link by the IRS to get a rough idea of the refund or tax I may owe at the end of the year:

http://apps.irs.gov/app/withholdingcalculator/

[Adam_747 6]

Only interesting if Uncle Sam was withhelding a 5-figure amount of your gross income... otherwise, I don't know how the 'interest free loan' would make any sense for someone making even 100K annually!

How much interest would a bank give you on $2000? (assuming that is your refund) .... unless you need that amount to pay necessary bills

I guess I see the refund you get back as a 0% interest loan to the government. Now if the government gave me my principle + interest on the refund, then I wouldn't mind lending uncle Sam the money. OP I use the following link by the IRS to get a rough idea of the refund or tax I may owe at the end of the year:

http://apps.irs.gov/...dingcalculator/

[Reyan 56]

I personally don't make money (interest) from just putting my money in the bank. I rather make my money work for me through investments instead of waiting at the end of the year for it to be returned by Uncle Sam. Hey to each his/her own, I just think differently in regards to how I manage my finances.