January 14, 2015

What factors do you consider when identifying how much in tax to withhold when submitting your W-4? Why?

4 thoughts on “January 14, 2015”

  1. Brennan Haag says:

    You should think of how many dependents you have and you should consider if you are married. You should consider all the allowances you have. As long as you don’t owe more than a thousand dollars in the end, then you were able to barrow money without interest.

  2. Mike Dunlop says:

    You should consider several things in determining the amount to be withdrawn on your W-4. the number of dependents you have, your other earned income from another job, your spouses earned income, your investment income, tax deductions and tax credits all play into the equation of how much you will owe in taxes at the end of the year. Properly estimating the total amount of income you will make assists you in understanding how much to have withdrawn each pay period from your check. You do not want to underpay the IRS as they will charge you a penalty. You do not want to overpay the IRS as that is just providing them with essentially an interest free loan which you could have used or made interest off of. Taxes are a complicated subject and you should meet with your accountant or financial advisor if you need assistance in determining an estimate of your annual tax liability so you can properly plan your withholdings.

  3. Garrett Haag says:

    How much money you want withheld directly affects how much money you want to receive for a tax refund or how much you want put towards your tax liability. If you want a larger amount withheld you can put more withholding, if you dont want that much money withheld you put a lower number of withholding on the W-4. It is smart to try and have the lowest amount you can on your refunds or even try to owe a little bit of taxes, under $1000. The reason for this is because you can use your money better by investing it, rather then having the government hold on to it without doing anything for you with the money. If you owe taxes at the time you got a free loan you could have used to invest over that time period.

  4. Mike Finley says:

    Nicely said, gentlemen. Let’s review.

    (1) When submitting your W-4, consider how many people are in your family. How much in tax credits you will have on your return. How much in tax deductions you will have on your return. As well as some of the other information stated above.

    (2) Submit the W-4 with any number that gets you to even or possibly owing a little bit. Keep that owing part under $1,000 and you will avoid a penalty.

    (3) Change the W-4 whenever your situation changes. Life is always throwing us curves. Stay flexible and make changes as needed. Onward!

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