Why don't you want to owe money? As long as you don't owe so much that you also owe penalties, owing them money means that you got an interest-free loan from them. Similarly, if you get a refund, it means you gave an interest-free loan to them.

Are you concerned that you might not have the money? In that case, why not take the difference and sock it away in a savings account?

We owe every year... no big deal.

Wouldn't you rather have that $5280 than to give it to Uncle Sam interest free?

Hello,

I don't so much mind owing, but I don't want to owe a lot. Or more accurately, I guess I'd like to be able to "prepare" and/or have an idea of how much I could anticipate owing. Does this question make sense? Can I assume that by getting this extra $5280 in our pockets now, that I could potentially owe this same amount come this time next year?

Thanks for your responses!! I appreciate it.

Elaine

Your taxes will be what your taxes will be. If you and your husband have steady, predictable income (rather than having it vary wildly due to bonuses or commissions), and you haven't had huge increases in pay, then your taxes next year will be roughly what they were this year. The question you need to ask is: Are we having a monthly amount withheld that at the end of the year will total about what our taxes were last year? What you should strive for is to be just a little over or a little under.

Right now you say you're having an extra $5280 in income from reducing withholding. How much was your refund last year? If it's less than this, you need to make some adjustments to get these two numbers into rough alignment. While it's ok to under-withhold and owe money, it becomes a problem if you are too aggressive, because it can trigger penalties, additional forms, and mandatory quarterly payments the following tax year if you don't have at least 90% of estimated taxes withheld, as I recall. If the math is too much for you, have your financial planner figure out how much should be withheld. You can specify this amount on the W-4, rather than simply changing the exemptions. Right now it sounds like you're guessing at some of this, and you should really try to get it right.

Yes, kudzu's right, as I understand it--you need to make sure that you're not off by more than 10% of whatever your taxes will be or you get penalties. No such thing as interest-free loan for more than 10% of your taxes. Of course, they get *our* money interest free all year, just because they can. :(

I've managed to use the irs's witholding caculator to get withing +/- $500 a year by adjusting throught the year.

There is a worksheet included with your W-4 form. Take a look.

What I do is a bit more involved. At the beginning of the year I estimate all my deductions and work out my income tax using the new rates information on the 1040-ES. Then in July I review my estimate and see if I'm still on track. I'm claiming 6 exemptions for myself this year.

Here is a link that might be useful: Worksheet on page 2

Meant to add: you also need to remember that if you have other sources of income that *aren't* taxed throughout the year, e.g. securities sales, you have enough withheld to stay within 10% of what the taxes would be *including* those sources of income.

Hello,

This is exactly what I needed to know, I'll get to work with the calculations and find an amount that will work.

THANK YOU!!!

Elaine

Hi..
i appreciate with your words...
i think, i got some new info from U.
thankx.
---------
Bob
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