Sunday, January 17, 2010

What is the best option for married couples completing W4?

My husband %26amp; I make pretty much the same salary. Should we both claim 1 on our W4 forms %26amp; file as ';married';, but ask that the withholdings are at the higher single rate?





I never seem to get this right and I don't want to pay in at the end of the year, nor do I want to give the government a nice fat interest-free loan!What is the best option for married couples completing W4?
Depends on your total combined income, how many deductions you have and what your taxes have looked like in the past.





My husband and I chose the higher single withholding option because of AMT with no allowances based on our last tax bill. I believe married couples are hit harder by the AMT and in our case, it means you are not able to itemize or take certain deductions, but this varies from case to case. I'm including a link to an AMT article I found. What you elect to withhold will be based on more than just you and your husband's combined income.





Good luck!





http://www.cbo.gov/ftpdoc.cfm?index=5386鈥?/a>





Since I also just saw your new information, I thought I would mention that some traditional tax deductions aren't deductible under AMT anyway, so if you are making (over $150,500 married filing jointly, I think so don't quote me), some deductions are excluded anyway. (Not the kids, but things like property and local taxes, which in NYC are huge).





Check with your accountant. If you had been taking other deductions on your taxes, they may be excluded if you hit AMT. Good luck again!What is the best option for married couples completing W4?
I have been struggling with this issue for the past five years! I can't ever seem to get it right.





What I've learned is that if you claim 1 or more, you'll get less taxes taken out of your check -- but you'll owe more at the end of the year.





It is frustrating because I make more than my husband, but since we're married, my salary bumps him up into a higher tax bracket than he would be otherwise. So he has to claim 0 and then request an extra $25 taken from his paycheck, to make sure we are paying adequate taxes. I really hate just giving that extra $25 from the paycheck, but we decided it's easier on us that way -- rather than having to fork over $600 at the end of the year. :( We also check the box next to ';married, but withhold higher single rate'; just to cover any gaps.





What helps us decide what to claim on our W-4s? I use TurboTax online to file my taxes, and the program helps you fill out your W-4 for the next year and shows you what you should put on it. It's also been a nice tool to show me exactly what can be deducted from your taxes, so it's nice.

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