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    am35849p's Avatar
    am35849p Posts: 1, Reputation: 1
    New Member
    		  
    #1

    Dec 16, 2008, 10:11 AM
    What should I claim on taxes?
    I am a recent college graduate and am just starting a job full time not making as much as I would like too. I live on my own where my rent is roughly around 700 a month. I have no dependents or anyone else I need to support. What should I be claiming on taxes? 0.1.2? I am not to sure. Hopefully someone can help me.
    jakester's Avatar
    jakester Posts: 582, Reputation: 165
    Senior Member
    		  
    #2

    Dec 16, 2008, 10:48 AM

    Am35849 -

    There are a couple of things to consider when making this decision:

    1) are you contributing any money to a 401k or traditional IRA?

    2) do you have student loans that you are paying back?

    If you answer yes to both, then you need to determine what your tax liability will be for 2009 based upon your expected income for the year. Check out the following link to determine your tax liability:

    2009 Tax Rate Schedules: Marginal Ordinary Income Tax Rates for 2009

    Say you make $30,000 gross annual salary. You contribute 4% to your 401k. Your taxable gross income would then be $28,800. You'll pay taxes only on that amount. At the end of the year, you can deduct your student loan interest from your taxable income. So, if you paid $1,000 in interest for your student loan, your taxable income would then be $27,800 but you'll have paid taxes on $28,800 so that plays in your favor.

    If you want to get a ballpark figure, check out this link and try different scenarios with exemptions: http://finance.yahoo.com/calculator/career-work/pay-02

    It's a little complicated if you are unfamiliar with how it all works but keep reading up on terms like Gross Income vs Adjusted Gross Income. Your AGI is the magic number, really. Hope that helps. Follow up with any additional questions.
    ebaines's Avatar
    ebaines Posts: 12,131, Reputation: 1307
    Expert
    		  
    #3

    Dec 16, 2008, 11:12 AM

    If you follow the instructions on the W-4 form you will see that you should claim 2 allowances - 1 for yourself, and 1 for being single. This assumes that you will be taking the standard deduction rather than itemizing.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #4

    Dec 16, 2008, 12:53 PM
    I agree with ebaines; claim SINGLE with TWO exemptions.

    That will reduce your refund, but ANY refund is an interest-free loan to the government and therefore should be avoided.
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