Weird tax question, maybe OT?

[abber]

Anyone here a tax expert?

I really don't understand withholdings! I was told recently that I should file a new W-4 with my work immediately after the babe is born, but I can't imagine it will change much because I won't be getting any income from them until 2009.

I'm also really confused on how to file our taxes. We're unmarried and have no plans to marry. Our finances are all in joint accounts, and the bf is planning on filing as head of household. Every page I've looked at says that only one of us can claim the exemption and it should be the person with the highest wages, which is the bf. Does this mean that I would only be able to claim myself?

Taxes are confusing! I know it's early to think about all of this, but maternity leave means I lose a lot of money and I am trying to figure out where every penny will be going for the next year...

[Skrimpy]

If your BF is going to file Head of Household and claim the baby then yes, you only claim yourself. He'll claim himself and the baby. I would also say if that's what you guys are going to do you should just leave your W4 as it is at work; but he should change his when the baby is born.

I'm not a tax expert at all so someone else may pipe in. But I do know that I filed Head of Household for 2007 and I claimed all three of my children - and nobody else could claim them. 2008 will be different b/c I got married. But Head of Household can claim eligible children (and elderly adults they are caring for).

[selena_ski]

So this is my understanding- again i am no expert-

If BF claims head of household and the baby, he will get 3 exemptions for the whole year, because the baby counts the whole year. He will most likely get a refund. (and might want to consider changing w-4)

However your filling status isn't going to change. you will still only be claiming yourself. so there is no need to change your w-4

If you go to IRS.gov there is a calculator for how many deductions you should be claiming on your w-4.

[annettemarie]

Moving to Frugality and Finances

[milletpuff]

Yes, if he claims the baby and files head of household, you would continue to file single. He gets an exemption for himself and one for the baby, you get an exemption for yourself.

There are other tax implications too, like he may be eligible for the Earned Income Credit if his income is less that around $30,000. He may also be able to claim a credit if you pay for childcare.

I would definitely play with some of the calculators available (I like the turbo-tax one at turbotax.com, or the IRS one), but keep in mind that they will only help with federal tax, not state, and they have limits for sure.

When it comes time to file, there are programs that can help you do your taxes for free in most larger towns and cities if your income is low or moderate. They can be extremely helpful, especially figuring out how things change with a baby in the picture!

[PassionateWriter]

i am a tax expert. but for now, im "just" a sahm.

be careful changing the w4's. the most prudent thing to do is to claim the least amount of exemptions and bank teh money in a special account (thus earning interest), w/ which to pay the IRS at teh end of the year. Claiming alot of exemptions essentially gives teh govt. an interest free loan. Not frugal IMHO. Of course, it takes discipline to set up one account only for taxes and not use it for anything else for the entire year (even if the car breaks down or the dryer goes out....the IRS wouldnt be returning that money to you in August if that happened if you claimed alot of exemptions...so you have to view the account that way). BUT.....it can put a few extra dollars in YOUR pocket as opposed to...well...maybe funding something you may not agree with.

we are in teh same situation. DP and I are not planning on getting married. He is going to file HOH and claim baby. But he's keeping his exemptions at 0. Financially, thats the most prudent thing to do.

Just make sure you get a SSN prior to 4/15. You cant file and claim the baby w/o one (said from experience and a very slowly moving town when ds3 was born).

[kanga1622]

If your BF is going to file HOH, then he should be the one to change his W-4. He should be able to add at least two more "allowances" on the form so they withhold less money from his paycheck (one extra for filing HOH, one extra for the baby).

The more "allowances" you put on your W-4, the less money they take from your paycheck in taxes.

[Skrimpy]

Originally Posted by PassionateWriter

i am a tax expert. but for now, im "just" a sahm.

be careful changing the w4's. the most prudent thing to do is to claim the least amount of exemptions and bank teh money in a special account (thus earning interest), w/ which to pay the IRS at teh end of the year. Claiming alot of exemptions essentially gives teh govt. an interest free loan. Not frugal IMHO. Of course, it takes discipline to set up one account only for taxes and not use it for anything else for the entire year (even if the car breaks down or the dryer goes out....the IRS wouldnt be returning that money to you in August if that happened if you claimed alot of exemptions...so you have to view the account that way). BUT.....it can put a few extra dollars in YOUR pocket as opposed to...well...maybe funding something you may not agree with.

we are in teh same situation. DP and I are not planning on getting married. He is going to file HOH and claim baby. But he's keeping his exemptions at 0. Financially, thats the most prudent thing to do.

Just make sure you get a SSN prior to 4/15. You cant file and claim the baby w/o one (said from experience and a very slowly moving town when ds3 was born).

I think if you don't claim any of your exemptions (on your W4) then you're not going to get any less taxes taken out of your paycheck. In other words, the gov't is going to take MORE taxes out of your paycheck. At the end of the year when you file your taxes you may get a bigger a return. However, this means that you've given the gov't an interest free loan *because* you did not change your W4.

If you're worried about having to pay due to your W4, and don't want to give the gov't an interest free loan, so to speak then you need to claim the proper number of dependents on your W4 (and for a man with one child I think he'd claim 2 - himself and his child). Then look at the difference in taxes taken out. Whatever is left in the paycheck because of the dependents should go into a savings account. Then you're accruing interest and if it turns out you'll need to pay at the end of the year, the money is there in savings.

But don't list 0 dependents if you want to avoid letting the gov't spend your money until tax return time Now if you don't mind that and want a possibly bigger return, go ahead and do that.

But in this situation it seems the BF should change his W4 to reflect himself and the baby as his exemptions, and the OP should keep hers as is, since I assume she'll file her own tax return in the tax season (her BF won't claim her on his, in other words).

That's just the way I'm seeing it though...

[Logan's Mom]

Originally Posted by PassionateWriter

the most prudent thing to do is to claim the least amount of exemptions and bank teh money in a special account (thus earning interest), w/ which to pay the IRS at teh end of the year. Claiming alot of exemptions essentially gives teh govt. an interest free loan. Not frugal IMHO.

Wow, I'm really confused. I thought claiming the most exemptions (closest to not having to repay) was the best thing to do. If I set my w-2 up to claim 0 -- then I'd be getting a big chunk of change at the end of the year while the government got the "interest free loan" from yours truly. I did the IRS.gov calculator and it told me to put in 10 dependents so I only get back $165 next year instead of over $1k.

[PassionateWriter]

im sorry everyone..i had a prego brain. take the MOST exemptions and they take out less...bank it....

[abber]

Thank you all! I spent about three hours the other day reading the IRS site and thought my brain was going to explode.

I must admit though, it hurts my heart a tiny bit to not be able to claim my child. Not for the money, but just the idea that he is not my dependent...I'm feeling a little conspiracy theory and thinking this is a way for men to further control women!

[milletpuff]

Well technically you could claim the child as your dependent, but if he has a higher income, then it's likely that you will see the most net financial benefit from having him claim HOH and the child.

I totally see what you mean, and I think part of it is that the tax code is written in lots of ways for a married nuclear family, and for families that don't fit that mold, the way it's spelled out on paper doesn't match how you see your own family. Think of it this way though -- if you are both working and earning income, you will likely come out better financially tax-wise then if you were married. It's TOTALLY that way with me and my partner! Ugh, don't get me started tho