W-4 Witholdings Adjustment

[Proud Liberal Dem]

My father-in-law has been "preaching" to my wife and I about changing our witholdings on our W-4 so that we get our "tax refund" back throughout the year instead of waiting until we file our taxes and getting one big lump sum, which he says is basically just a "loan" to the government/IRS. He stated that it would be more beneficial for us to withold less and put the extra money in a savings account where it would gain interest FOR US. My wife and I have finally come around to his way of thinking about the subject and want to change our witholdings but we don't want to withold too little and then end up owing (although if we have been saving back the extra all year the money will still be there if we need to pay something back). Both my wife and I work full-time, we are buying a house, and we have 3 dependents. Turbotax calculated 5 witholdings for my wife and 8 for me but those numbers seem questionable to me. Does anybody have any advice on how many witholdings we can actually claim? Thanks!

[wakemeupwhenitsover]

1. You can't just make up a number of dependents anymore.

You used to be able to declare as many as you wanted during the year & then submit the true number with your taxes, but the IRS ended that years ago.

Go to your employer & ask for a W-4. At the same time check & see how many you're declaring now. There's a worksheet with the W-4 that should walk you through it. Also, you can call or go online to the IRS & get Publication 919 for more info.

Hope this helps a bit.

[A HERETIC I AM]

2. Link to Pub. 919

http://www.irs.gov/pub/irs-pdf/p919.pdf

[Proud Liberal Dem]

3. Thanks!

Got the form!

[REACTIVATED IN CT]

4. Chiming in late here...

In addition to the very useful Pub 919, there is on irs.gov an interactive program that will help you figure out if you are on target for the correct amount of withholding. You need to have a recent paystub in hand when you do it