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Old 02-01-2011, 12:44 PM
 
2,776 posts, read 3,243,730 times
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My wife and I work for the same company and we have 3 kids. Can we each take 4 exemptions for ourselves and the 3 kids, or will this create a problem since we file married joint?

If we cant do this, how do we split up the exemptions(like I take myself and one kid, she takes herself and 2), or does one person take themselves and all the kids and the other takes just themselves?



Help is greatly appreciated
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Old 02-01-2011, 01:08 PM
 
785 posts, read 1,846,083 times
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First of all, there is no magic universal answer. No one can determine this for you except either you, your wife, or someone you trust/hire, because I really don't think you want to reveal all of the information needed to fill out a W-4 on a public message board. With that said, my answer is as follows:

Just follow the instructions on the form W-4 (you can find it on the IRS homepage- Internal Revenue Service). It doesn't matter if you and your spouse work for the same company or different companies.

For the worksheet on page 1 of the W-4 instructions, you should put down a minimum of 5 exemptions. (1 for self, 1 for spouse, 3 dependents). If household income is below $120,000 or you have enough qualified child care expenses, use the info on lines F and G to increase the number of exemptions. If you itemize taxes, use the worksheet on the back to figure out the proper number of additional exemptions you should take. DO NOT split the kids, especially at this point.

After you have completed the worksheet on page one, go to the [SIZE=2][SIZE=2]Two-Earners/Multiple Jobs Worksheet on page 2. Follow the instructions there to see what the recommended exemptions withholding number should be. Don't be afraid if the total number of exemptions is higher than you expect. Most people have way too much money withheld because they are afraid of owing money next year.
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Despite warnings about penalties for underpayment of taxes, it's not that easy to trigger penalties. It is better to owe Uncle Sam a few hundred dollars next April than receive a few thousand back. Just follow the directions on the W-4, and you'll be in fine shape.
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Old 02-01-2011, 02:22 PM
 
Location: Columbia, SC
1,860 posts, read 4,608,820 times
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As Mike from NIU noted, there is no magic formula. First off, do you itemize? Do you have a large tax refund? Or do you typically owe? How much are you making? Answers to those questions enter into the equation on how many dependents to claim on your W-4.

You may both claim 4 and still get a $2,000 refund, well in that scenario, you'd want to raise your exemptions to 5 or 6 and see how it effects your next check. If you are paid bi-weekly, you'd want to see your combined Federal tax withholding decrease/take home pay increase by about $75-80/check so that you are getting that $2k throughout the year rather than giving the IRS an interest-free loan all year long.
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Old 02-01-2011, 04:56 PM
 
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Both of you claim married and 8. Keep the money in your savings account (don't spend more than 60% of it) and pay uncle sam on the last tax day. You collect the interest not him.

If you want to do it like everyone else and collect a large tax return then both of you claim married at a single rate with 0.
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Old 02-01-2011, 05:17 PM
 
433 posts, read 1,140,751 times
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Quote:
Originally Posted by danieloneil01 View Post
Both of you claim married and 8. Keep the money in your savings account (don't spend more than 60% of it) and pay uncle sam on the last tax day. You collect the interest not him.

If you want to do it like everyone else and collect a large tax return then both of you claim married at a single rate with 0.
That could bite you if you withheld too little throughout the year..

Two scenarios 1) they need to have withheld 90% of the current year's tax due to IRS or 2) 100% of the prior year's tax paid in to avoid penalties.

You could keep the $$ and pay estimated taxes on the due dates like you were self employed, but why bother with the hassle if you do not have to.
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Old 02-02-2011, 12:28 AM
 
943 posts, read 1,174,119 times
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I don't really disagree with anything that's been said here yet. But note this: The number put down down on the W-4 form is called "allowances", not "exemptions". "Exemptions" is the number that goes on the 1040, it counts you, your spouse, and your dependents. They have different names specifically because they can be different numbers. You can have more allowances than exemptions if needed to withhold the correct amount of tax.
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