Married, tax questions..

[TBuck07]

Hey guys,

I'm recently married and had a general question about taxes. I've heard mixed things on both, so my first question is my filing status for my tax deductions from my paychecks. For example, I'm claiming 1 now, and filing single. When I run a paycheck calculator and change it from single to married, I'm showing a slight jump in my pay. I'm assuming there is less taxes taken out, so I wont get as big of a refund later? Do I have to show that filing status as married?

Also, when filing for tax returns, I've heard more that it helps to file jointly than separately as there are more benefits. What's your opinions on this? Mainly I'm concerned now about the filing status for paychecks because I could always use more money on my checks, but figured I'd just be getting less back come tax time..

TB

 

[03cobra#694]

Saw the other thread, and already? Congrats BTW.

 

[WHeitzman]

You can claim whatever you want, going to 2 will mean less taxes are taken out. How much you get back and filing joint or separate depends on each of your situations. To over simplify it, filing joint would be like adding your two incomes and dividing by 2; so if you made 100k and she made 50k you would get taxed like a single person making 75k. There are also rules on when you can file seperate, but I don't remember exactly what that is. Your best bet is to either ask an accountant or just run the numbers thru turbotax both ways and see what happens

 

[NC85]

File 0 and single if you want a refund. Leave it how it is and you may break even or owe a few at the end.

 

[TBuck07]

You can claim whatever you want, going to 2 will mean less taxes are taken out. How much you get back and filing joint or separate depends on each of your situations. To over simplify it, filing joint would be like adding your two incomes and dividing by 2; so if you made 100k and she made 50k you would get taxed like a single person making 75k. There are also rules on when you can file seperate, but I don't remember exactly what that is. Your best bet is to either ask an accountant or just run the numbers thru turbotax both ways and see what happens

Thanks for all the responses guys. To clarify, I am speaking about taxes taken out on my paychecks, not tax return time. If I change my filing status as married instead of single it appears I'll get more money per paycheck, but does that mean I'll just get less when tax return time comes? I just noticed this when doing a paycheck calculator is why I'm asking.

 

[krt22]

It really depends on your income, if your wife is also working her income, and the total deductions you have available.

The ideal situation is to claim as much as you can, as to not underpay with a minimal refund. The IRS calculators are pretty good.

http://www.irs.gov/Individuals/IRS-Withholding-Calculator

 

[WHeitzman]

but does that mean I'll just get less when tax return time comes?

Your return depends on what the two of you would make combined and what deductions you qualify for, but all things equal claiming two results in a lower return than claiming one will, because you will be paying less during the year

 

[Golf4283]

okay I haven't read all the comments here but as a former auditor and public accountant I never understand why people want bigger tax refunds at year end. Think about it, the government has your hard earned money all year long. They are free to spend it as they want and then at the end of the year you actually get less back because the time value of money says a dollar today is worth more tomorrow. You give them your dollar today and get that same dollar back.

If I were you I would spend a little bit of money and talk to a certified financial planner. They can help you come up with a plan to break even at year end or (as in my case), owe a little bit.

This is sounding more like a rant I suppose than advice but I always get steamed up cause my wife was like that and always got a huge refund at tax time. I had to overcompensate on my W4 just to even her out.

 

[97ReoCobra]

Personally I'd rather get a usable amount of money at the end of the year rather than a few dollars each paycheck. And putting a few bucks into a savings account each check will get you about $1.04 in interest over the year. Whoopty do....

"the time value of money says a dollar today is worth more tomorrow." Is that a typo? A trip to the grocery store will prove that incorrect. That dollar will buy less next year than it will now.

 

[LS2GTO]

If I change my filing status as married instead of single it appears I'll get more money per paycheck, but does that mean I'll just get less when tax return time comes?

Isn't that the idea? To get less money taken out each paycheck and to have a smaller refund at the end of the year? In the end it's all the same money to you whether you get it now or at tax return time.

Personally I'd rather get a usable amount of money at the end of the year rather than a few dollars each paycheck. And putting a few bucks into a savings account each check will get you about $1.04 in interest over the year. Whoopty do....

Me personally, I'd rather have an extra $200 a month that I can start spending on car parts the day my paycheck comes in as apposed to wating over a year to start buying those mods.

If it's just a few dollars each month I guess it doesn't matter. When you're talking a couple hundred each month that you're "missing out on" that's not peanuts. And if you're putting money in a savings account expecting it to grow then you're doing it wrong. There are plenty of other means for having money grow besides a savings account.

Is that a typo? A trip to the grocery store will prove that incorrect. That dollar will buy less next year than it will now.

Not if you invest it. Take that dollar today and put it somewhere that it can grow and it will be worth more tomorrow (obviously that can vary based on earnings and inflation).

 

[Uncle Meat]

okay I haven't read all the comments here but as a former auditor and public accountant I never understand why people want bigger tax refunds at year end.

Really? You really don't understand?

Think about it, many adults have ZERO money saved for retirement (55% of pop.). Most Americans have little to no money in their savings. Why? Because they spend it as fast as the get it on crap they really don't need.

Back in the day if you didn't put a little money away for a rainy day you had the potential of being severely FUBAR'd if an emergency came up. Now-a-days it isn't nearly as dire. There's a whole host of government programs to bail people out of tough times.

People just can't, or are not willing to save and/or invest money anymore. Money just burns a hole right through their pockets. They find it easier to let Uncle Sam keep their cash (interest free) all year long and then deliver it as a lump sum at tax time.

People are lazy.

U.M.

 

[LS2GTO]

Really? You really don't understand?

Think about it, many adults have ZERO money saved for retirement (55% of pop.). Most Americans have little to no money in their savings. Why? Because they spend it as fast as the get it on crap they really don't need.

Back in the day if you didn't put a little money away for a rainy day you had the potential of being severely FUBAR'd if an emergency came up. Now-a-days it isn't nearly as dire. There's a whole host of government programs to bail people out of tough times.

People just can't, or are not willing to save and/or invest money anymore. Money just burns a hole right through their pockets. They find it easier to let Uncle Sam keep their cash (interest free) all year long and then deliver it as a lump sum at tax time.

People are lazy.

U.M.

Honestly, if people are bad at saving all year long then what's going to magically change at refund time? You think that by getting a huge sum once a year vs. smaller sums each paychecks they are going to save more?

Nope. They're going to blow their big tax refund on stupid shit the same way they would blow their regular paychecks each month.

People with poor money management are not going to suddenly become savvy money saving accountants at refund time. If anything, they will blow it on more expensive shit because they see this huge lump of money and they go "shit I got lots of money to spend". At least if you give them a few extra bux each paycheck they will hardly even notice it and change their spending habits. But given them a huge lump sum and all of a sudden they feel rich and go blow it all.

 

[black4vcobra]

Honestly, if people are bad at saving all year long then what's going to magically change at refund time? You think that by getting a huge sum once a year vs. smaller sums each paychecks they are going to save more?

Nope. They're going to blow their big tax refund on stupid shit the same way they would blow their regular paychecks each month.

People with poor money management are not going to suddenly become savvy money saving accountants at refund time. If anything, they will blow it on more expensive shit because they see this huge lump of money and they go "shit I got lots of money to spend". At least if you give them a few extra bux each paycheck they will hardly even notice it and change their spending habits. But given them a huge lump sum and all of a sudden they feel rich and go blow it all.

While many of us here use our tax return for car parts, vacations and (hopefully) saving some for retirement, many people depend on a tax return to bail themselves out of bills and/or CC debt that they can't keep up with over the course of the year.

The sad truth is that, within reason, no matter how much most people make, they will always find a way to run a deficit through the year. Getting a $2-5k (or more) tax refund in spring helps bail them out. If they adjusted the withholding perfectly (not really possible but one can get close) many would still run a deficit but would not have a lump sum coming to help bail them out.

Not saying that is the way it should be but rather that is the realty for many people.

 

[starnsey]

I got married two years ago and my refund was larger both years when I filed jointly as opposed to separately. But that first year was a shot in the dark W4-wise since we got married then we bought a house last year so that was another shot in the dark. Hopefully this upcoming year I'll get the taxes more squared away so it's not some huge refund at the end of the year. Just being lazy and conservative right now so I at least don't have to owe anything.

 

[Uncle Meat]

Honestly, if people are bad at saving all year long then what's going to magically change at refund time? You think that by getting a huge sum once a year vs. smaller sums each paychecks they are going to save more?

I think we are actually agreeing with each other. My point was the ONLY way some people can save up even a modest amount of money is by letting the government hold it for them and deliver it at tax time. I totally agree those same people will spend it all on something as soon as they get it! I wasn't insinuating that they were putting their tax return in the bank/401K or anything like that.

U.M.

 

[Golf4283]

My point doesn't go to the fact that people suck with their money. My point is just why let Uncle Sam hold that money for 12 months and then get less back then what you gave. Yes $1.04 in interest for the year sucks but guess what.... that is still better than a big fat donut.

And to the point that someone would rather not get a few bucks a paycheck back but a refund at year end let's do some math....
A few bucks is what? $3-4 I'd say.
If you get paid weekly then for the year that few bucks is $150-200.
Is it really worth it to save for that awesome tax return you're going to get?

The problem, which I think we are all agreeing on here, is that people suck with their money. I personally have a pension right now and still contribute to my own personal IRA just in case. That's why my suggestion to the OP as well as anyone is to spend a few extra dollars and talk to a financial planner. It may sound dumb but having peace of mind about your future is worth it.

Just my $0.02 compounded weekly instead of waiting until year end.

 

[97ReoCobra]

Wow. There's no middle of the road with you people is there. People are all either rich, beautiful and geniuses, or poor, ugly and dumb.

 

[Golf4283]

Wow. There's no middle of the road with you people is there. People are all either rich, beautiful and geniuses, or poor, ugly and dumb.

No, people are either smart with their money or not. Regardless of their wealth.

 

[nxhappy]

"Claiming Zero Allowances
•The maximum amount of taxes is withheld. Meaning, when it comes time to file your tax return you will most likely receive a refund.
•If you are claimed as a dependent on someone else’s tax return, you should claim zero allowances.

Claiming One Allowance (best option if you are single with one job)
• If you are single and have one job, by claiming one allowance will most likely result in a refund when you file your taxes.

Claiming Two Allowances
•If you are single, claiming two allowances will get you close to your tax liability but may result in tax due when filing your taxes.
•If you are single and work more than one job, you can claim one allowance at each job or two allowances at one job and zero at the other.
•If you are married, you should claim two allowances

Claiming Three Allowances
• If you are married and have one child, you should claim three allowances.

Additional Allowances
•If you file as head of household you can claim additional allowances
•If you had at least $1,900 of child or dependent care expenses that you plan on claiming credit
•If you are eligible to claim the Child Tax Credit


Read more: http://www.rapidtax.com/blog/breakdown-w-4-allowances/#ixzz3cg3ZDIu5

 

[nxhappy]

Essentially, if you claim a zero, you are giving our shitty government money to hold. Yes, Obama thanks you for that. oke:

If you can manage your money, it is best to maximize your earnings each paycheck, and claim as many points as possible (2-3).