Some tax advice questions

[Demon-Xanth]

So I'm looking at moving from an apartment to a house, so month-to-month income is going to be a wee bit more important, and I'd like to get the right amount of deductions taken out so I don't end up with a huge bill, but don't give the government a 200/mo loan. I've been claiming 0 deductions on my W4 in the past and getting back some four digit returns.

I'm a single guy living alone, what should be claimed as far as deductions and exemptions on my W4?

 

[CPA]

Download the 2007 prelim version of Taxact and use their tax forecasting tool.

 

[BradT]

Originally posted by: CPA
Download the 2007 prelim version of Taxact and use their tax forecasting tool.

CPA, I love you. You are such a nice and helpful friend on here, yet you do it entirely free. Its people like you that make me feel all warm inside.

 

[Demon-Xanth]

Okay, I tried out the free version. Either I'm missing it or is it locked out unless you give them money? (both are entirely possible)

 

[EagleKeeper]

As a rough estimate:

Look at what the interest payments and taxes will be on the place for a year.

Divide that amount by 3000. (Equivalent to an exemption).

Take the result of the division and increment by one.

That will get you a good close baseline W4 withholding number.

After a solid year (ie 2009), re-evaluate your withholding by now looking at any additional refund that you get.

Reapply the formula against your return and adjust the W4 again by the result.

 

[Fern]

Originally posted by: Demon-Xanth
So I'm looking at moving from an apartment to a house, so month-to-month income is going to be a wee bit more important, and I'd like to get the right amount of deductions taken out so I don't end up with a huge bill, but don't give the government a 200/mo loan. I've been claiming 0 deductions on my W4 in the past and getting back some four digit returns.

I'm a single guy living alone, what should be claimed as far as deductions and exemptions on my W4?

Here's your formula:

1. Calc estimated mortgage interest plus real estate taxes. (If your planning on buying this year I wouldn't bother for '07, the amount is unlikley to exceed your standard deduction by much, if at all. But the formula will work for '08)

2. Add any other Sch A itemized deductions (state income tax, charity etc).

3. Total #1 & 2 (total estimated sch A itemized deductions for the year)

4. Subtract your standard deduction amount from #3 above.

5. Divide the result by $3,300. Round down to the nearest whole number.

NOTE: You only add additional exemptions for the amount of your itemized deductions that EXCEED your standard deduction amount. The standard deduction amount is already built into the withholding charts.

Fern