Check out some similar questions!

figtree · Aug 28, 2007, 04:38 PM

Hello. I just stumbled upon this site and was wondering if anyone can advise me.
I'm starting a new job in Manhattan and I live in NJ. Is there a way to fill out my W-4 so I don't have so much taken out of my paycheck BUT does not put me at risk of owing money at the end of the year? I usually claim 1 on my Federal return.
Any advice would be appreciated. Thanks.

AtlantaTaxExpert · Aug 29, 2007, 08:23 AM

If you claim ONE exemption on your W-4, you should be okay. Remember that ANY refund is an interest-free loan to the government, so, from a money management viewpoint, you want to PAY come April 15th.

Now, you need to have NY state income taxes withheld from your check, because you are liable for NY state taxes on your NY-based income. Claiming one exemption on the NY form should be okay as well.

You need have NOTHING withheld for NJ, because NJ will give a credit for the NY taxes paid, and, since NY tax rates are HIGHER than NJ, the credit usually completely offsets your NJ tax liability. This assumes that the pay from the NY job is your primary (over 90%) source of your income.

figtree · Aug 29, 2007, 04:51 PM

Thank you for your prompt reply. Is there a web site or some sort of calculator I can access to figure out what my liability would be if I claim One on the federal and state as opposed to Zero?
Thanks.

AtlantaTaxExpert · Aug 29, 2007, 05:24 PM

Yes. The withholding tables are in an IRS pub (cannot remember the number) which can be downloaded from Internal Revenue Service

figtree · Aug 30, 2007, 11:59 AM

HI. I filled out the W4 personal allowances worksheet and I come up with TWO. Lines A & B (1 ea.)... line H = 2.
I've always claimed ZERO and received a refund. I'm trying to get as close to "equal" as possible without owing too much.
The IRS worksheet to calculate taxes will not let me proceed because I haven't earned anything for 2007 and therefore, cannot fill in the request for 'taxes taken out to date.' J

AtlantaTaxExpert · Aug 30, 2007, 01:30 PM

Claiming TWO exemptions is okay, but it increases your chance of having to pay something come April 15th. If that is not a problem, go for it!

Also, are you married, and does your spouse work? If yes to both, then go BACK to claiming ZERO exemptions, because your spouse's tax rate starts where YOUR tax rate ends, probably in the 25% range.

figtree · Aug 30, 2007, 01:43 PM

Thanks again for your response. I file single and have no dependents. How much I will owe if I claim 1 or 2 is exactly what I'm trying to figure out.
There must be a way to calculate this. Years ago I would claim 1 on my W4 and more or less break even. Now, I'm always claiming Zero and receiving a refund which is an interest free loan to the IRS... I need it more than they do! J

AtlantaTaxExpert · Aug 31, 2007, 07:02 AM

Then go with TWO exemptions. You may end up paying, but you will determine that in late February and have almost three months to get the money together.