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Old 02-26-2008, 02:53 PM
 
25 posts, read 19,817 times
Reputation: 13

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My wife and I were married last May. 2007 was the first year we filed jointly, however we never changed our deduction status from when we were first married. We've both claimed '0' and each have received a respectable return. This spring we plan on buying a house and I'd like to change our deduction status to allow more in our paycheck to cover our monthly. Last year I had nearly 20% taken out in fed witholdings and received a return. Nearly 5% in state and I still owed. Since I earn 30% more than my wife our tax preparer recommended we set up our deduction status as.

Me Fed:"1"
State:"0"

My wife: Fed- "0"
State- "0"
I don't want to end up in a hole next Spring owing tons.

By Fall our mother in law will be living with us as well. She is disabled and she will be contributing some living expenses toward our mortgage. She encouraged us to use her as a dependent. How will that affect her taxes? She earns about $2200 per month between SS#, pension and interest off her IRA.
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Old 02-26-2008, 05:04 PM
 
Location: Denver, CO
79 posts, read 457,690 times
Reputation: 45
I would recommend increasing your 401(k) contributions before changing your tax status.
This way, you get to keep the money your put in your retirement plan and then you are taxed on the portion of your income remaining AFTER your 401(k) contribution.
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Old 02-26-2008, 06:48 PM
 
25 posts, read 19,817 times
Reputation: 13
Quote:
Originally Posted by mrlucero2002 View Post
I would recommend increasing your 401(k) contributions before changing your tax status.
This way, you get to keep the money your put in your retirement plan and then you are taxed on the portion of your income remaining AFTER your 401(k) contribution.
Actually I'm looking to decrease that a little as well... just for the first year of my mortgage. I'malready contibuting 10% of my gross. My company matches 100% up to 8%.
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