being married, and taxes

[rh71]

Finance people help me out... I'm looking at the IT-2104 form for Employee's Withholding Allowance Certificate (NY).

I assume this is something I want to do since I'm supposed to be taxed less with a "married" status right ? Do I choose: 1) Married or 2) Married, but withhold at higher single rate ?

I see in the "instructions":
Married couples with both spouses working ?
If you and your spouse both work, you should
each file a separate IT-2104 certificate with your
respective employers. You should each check the
box Married, but withhold at higher single rate on
the certificate front, and divide the total number
of allowances that you compute on line 19 and
line 30 (if applicable) between you and your
working spouse. Your withholding will better
match your total tax if the higher wage-earning
spouse claims all of the couple?s allowances and
the lower wage-earning spouse claims zero
allowances.

So choose 2, but WTF does "claim allowances" mean ?

Does claim allowance mean "give me back" and withholdings mean "you keep for tax purposes" ?

Wouldn't this mean that I'd get taxed more while my wife gets nothing out (what does zero mean anyway) ? I know it works out for the both of us, but I want clarification on how exactly.

 

[ggnl]

Allowances are supposed to be dependents. The more allowances you claim the less tax they withhold. It's supposed to equate roughly to the tax breaks you get for having dependents. If you dont have any kids and you both work, then you should probably both withhold at the standard married rate with 0 allowances.

 

[rh71]

let me get one thing straight first... "the less tax they withhold" is a good thing for me, no ? I get more money on the paycheck ?

 

[shuan24]

NO thats not good. You're going to end up pay more taxes in the end of the year.

 

[shuan24]

Here's to clarify: Say I make 50K a year. Lets say I fall under the 25% tax bracket. Lets also say I dont have any money in stocks, investments, no kids, yada yada yada. The simplest case. At the end of the year, you're going to owe Uncle Sam pretty much 25% of 50K, or $12.5K.

Now, you can choose to withhold ~1K per month to pay for this, or you can withold $500 per month. If you chose the latter, you'll end up paying 5K at the end of the year. Lots of people try to overpay per month, so at the end of the year they can get a "refund". Its technically a interest free loan to Uncle Sam, but its better than having to pay him at the end of the year.

 

[CChaos]

Originally posted by: shuan24
NO thats not good. You're going to end up pay more taxes in the end of the year.

That's a bit hasty as it depends on his situation. If he generally gets a big refund, then why give Uncle Sam the loan. Of course if he usually comes out even or owes a bit then this is a bad idea.

 

[rh71]

well my goal is not to have to pay Uncle Sam at the end of the year. I think I'm a "1" now and get money back every year but since getting married, don't know what to change it to in order to take advantage. I'm being told to change it to a Married "1". Will the simple act of doing this allow me more money ?

I'm asking since I hear getting married gives you a tax break (or is it only with kids?)...

To make it even more confusing, they are presenting the "Married, but withhold at higher single rate" option.

 

[richardycc]

I've just changed my status to married from single, and keeping everything else the same. whats up with this IT-2104?? did I do it right?

I am getting more money each paycheck, but I think it is from dropping my insruance and got myself on my wife's company insurance.