changing income tax witholding

[rose angel]

I am a SAHM, and we usually get a big income tax refund, because hubby hasn't changed his W4 since right after we were married (no kids, I was working) it is fun to get a few 1000 of money in a lump sum, but more practical to have it month to month, and put some in savings etc.
Anyone else done this? I am a little scared it will make us OWE taxes, which would not be good. Any advice on avoiding that?

[shelbean91]

To change it is easy, just ask the employer for a new w4. There are so many variables that impact how much you get back, it's nearly impossible to figure out unless you're an accountant. I would start by changing only 1 exemption, single to married or married with 0 to married with 1 or 2 dependents (since he could technically claim married with 4 based on your siggy line- you and 3 kiddos. Then, after you file this year and see what your refund it, adjust it a bit again, remembering that this year is almost over and most of the year has already been at the higher witholding amt.

[rose angel]

Thanks! I wasn't sure if I could do that. I had a thought that maybe if I put one kid on the W4 and then claimed 3 at tax time, I might get in trouble. (I am scared of the IRS)

[DesireeH]

We did this after last year too. I was always so scared we would have to pay so we claimed low. But we got back 3000 dollars last year so I knew we could claim more. I'd rather have my money and make the interest off it than have the government make the money off it all year even if it means getting less back! LOL

[shelbean91]

The w4 is basically just how they determine what is to be withheld. You could also claim the correct amount on the w4- married/4, but put an additional % or $ amount per check, but most find it easier to change the number of exemptions. What you fill out on your tax forms when you file is most important, from what I understand.

[Alkenny]

Ideally, you should claim all of you. Then take the difference that you'll be getting each day and put it back into some sort of interest bearing savings plan. At income tax time, if you were to owe in, you could pay back out of said account PLUS still have the interest. If not, you have all of that money PLUS the interest.

[rose angel]

Originally Posted by Alkenny

Ideally, you should claim all of you. Then take the difference that you'll be getting each day and put it back into some sort of interest bearing savings plan. At income tax time, if you were to owe in, you could pay back out of said account PLUS still have the interest. If not, you have all of that money PLUS the interest.

That was what I was thinking. They still tax the interest though :LOL But at least I would end up with more than lending them money tax free.