How Many Exemptions Should I Claim on My W-4?
Everyone receiving a paycheck is required to complete IRS form W-4 for tax purposes. If you are starting a new job, or if your personal situation has changed, you will need to fill out the form again. Knowing how many exemptions to claim is a key factor in your tax liability, as well as your paycheck amount.
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General Information
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Always keep your income in mind. The more exemptions you claim, the bigger your paycheck will be. The fewer exemptions you claim, the smaller your paycheck will be. If you claim too many exemptions on your W-4, you may have to pay more taxes to the IRS at tax time each year.
Yourself
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If you cannot be claimed as a dependent under anyone else, you can claim yourself as your first exemption. If someone else can claim you as a dependent, such as a parent or grandparent, you cannot claim yourself.
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Marital Status
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If you are single, married with only one household income, or the second household income is less than $1,500, you can claim another exemption.
Married Couples
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You may choose to claim another exemption if you are married. However, many married couples will choose not to take this exemption to avoid paying in too little throughout the tax year.
Dependents & Child Care Expenses
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You can claim one exemption for each dependent, usually children, for whom you are the sole provider. If you pay $1,800 or more in child- or dependent-care expenses per year, and you claim this amount on your tax return, you can claim another exemption.
Head of Household & Child Tax Credit
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If you file your tax return as the head of household, you can claim another exemption. If you can claim the Child Tax Credit you can claim further exemptions, unless specified otherwise in a divorce decree or agreement. Income limitations apply and can change for each tax year. The number of exemptions you are able to take for this credit will also change each tax year and by the number of children you have.
Final Steps
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Add all of your exemptions together and this will be the number of exemptions you could claim. However, to avoid having to pay in to the IRS during tax season, many individuals choose to claim fewer than they are allotted. The general exemptions claimed for most married couples with two children ranges from one to four.
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