On Federal W2 form - do I claim zero to get more back at tax time?

I'm single and a student, paying my own tuition so I get to use a lot of deductions filling out my taxes in march. I also don't make much money, the most I've ever gotten back from my federal taxes was just under $1,000. My question is, if I want more money taken out of my pay to get more back in March, do I claim one or zero?
Additional Details
If I got more back in each pay, It would be hard for me to save it. I like getting a big refund, especially right before christmas time. :-)

To get the maximum deducted from each paycheck and therefore maximize your refund, you need to claim zero. I used to be an accountant and do payroll.

Yes, but can't you just put the extra money in the bank and save it up?

This is not a good idea. You do not want to get a refund. All that means is you are giving Uncle Sam an interest-free loan. Better to have less withheld, put it in a savings account and EARN INTEREST (more money for you).

the less exemptions that you claim, the more that will be withheld

Why do you want money taken out so they can give it back to you? Claim the deductions that you are entitled to using the worksheets, then set aside $100 each month on an Orange Savings account or buy CDs. That way you can have $1,000 or more to play with in March.

But to answer your question: Yes, if you claim zero, you will have the maximum taken out of your paycheck.

Filing Single with zero "allowances" (not exemptions, not dependents) on your W-4 will, indeed, give you a larger refund than if you filed with any other allowance. You could have even more withheld (and thereby, a larger refund) if you enter an amount in line 6 of the W-4 (additional amount withheld from each paycheck). Put a 25 in here and $25 dollars from each paycheck will be sent to the IRS on your behalf. You can never get any penalty for withholding too much or having too large a refund. Don't listen to the person who said "Exempt". That eliminates all withholdings. You can be penalized for writing "Exempt" if you don't qualify to do so.

As far as your "I like a large refund especially at Christmas", since when does one celebrate Christmas in April?

Personally, I think you are heading in the right direction, but are on the wrong track. It is good to set aside income for a rainy day, but there are three inherent problems with doing so via withholding.

1) You make no interest on the money

2) If you should need it in an emergency, you can't get to it until the beginning of the next year.

3) Once you get it, you will probably blow it on something you really don't need and then have to start all over saving.

If you really have a hard time not spending money "in your pocket", why don't you do what I did. Open a savings account that pays interest at a different bank. Make it an account with no checking and no ATM card so it is difficult, but not impossible to get to the money. Then, tell your employer to put a certain percentage or a certain amount from each check into this account each pay period. Most employers use direct deposit where you tell them your bank account and your entire paycheck is deposited. If yours is this way, they will also allow you to choose a 2nd account to put money into. I was putting $25 into an account I opened at a credit union each paycheck. When I got a raise, I increased it a little. Eventually, I had enough money in the account to use it for a down payment on a house.

Think about it.

Single, zero on your form W-4 that you sign and turn in to employer for withholding purposes. You can also ask to have additional FIT withheld if you want a larger refund.

You should file "exempt".

Yes, you claim zero through the year and one at tax time.

you should just follow the law

Enter Your Message or Comment

User Name:
User Email:
Post a comment:

Archive: Forum -Forum -Finance - Links - 1 - 2 - RSS - All RSS Feeds
The Causes and the Results. 0.004
Copyright (c) 2011 Financial Crisis Tuesday, May 29, 2012 - Terms of use - Privacy Policy