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Gross_Pay
Nov 12, 2010, 08:29 AM
I just retired from active duty Air Force and now have a civilian job and I'm unsure how many exemptions I should claim on my W-4. I have a wife, that works, and two daughters, 3 & 6 so we pay child care for both. We also own a house. Any ideas?

ebaines
Nov 12, 2010, 10:52 AM
Just follow the direction on the form. You would appear to want to claim 4 allowances:

1 for yourself
1 for your spouse
2 for your children

I am assuming that your wife makes more than $1500 and has an "appropriate" amount of taxes withheld from her pay check. Depending on the details of your situation - what tax credits you can claim, how much your wife earns and is having withheld, etc - you may find that this results in too much or too little being withheld. The objective is to make it so that come April you either owe just a little bit in taxes or the IRS owes you just a little bit in a refund. If after you do your taxes you find that this results in too much or too little being withheld, you can submit an updated W4 to your employer.

excon
Nov 12, 2010, 11:08 AM
Hello G:

Ebaines is, of course, right on...

There IS another approach to take, if it interests you... Some people can't save a nickel no matter how hard they try. In order to save, they NEED a forced savings plan. The IRS can BE your forced savings plan.. I don't recommend it because it doesn't pay interest... It DOES, however, preserve principle.

As noted, the idea above is to NOT be owed a big refund, unless that's EXACTLY what you want. If that would be something that would interest you, you could claim 0 exemptions, and get a whopping refund next February.

excon