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.

IMHO, you need to be careful claiming the sales tax deduction for sales tax that you personally didn't pay. Is the builder who bought the materials claiming the sales tax as part of his cost of materials on his return? If so, those dollars for sales taxes paid are already being deducted by the builder. If you also deduct the sales tax that the builder paid, then the deduction is being taken twice for the same amount of sales tax. I think the IRS would frown on 2 deductions for the same dollars spent in sales tax. If the builder is paying materials under a tax exempt numer, then reselling those materials to you and charging you sales tax, that amount should be reflected on your invoice as zone 8grandma suggests and would be deductible on your return. I know nothing about Washington sales tax law, but I do believe that that both you and your builder claiming a deduction for the same sales tax would be frowned on by the IRS. Hopefully this makes sense. I've rewritten it several times and am still not sure it's clear what I'm trying to say.

Just moving it back up a bit. Some who might find it useful may not have seen it earlier. That amount that a single person can earn without being liable to pay one cent of income tax claimed above is incorrect. The correct figure was $46,345.00. in 2006 ... if solely dividends on Canadian stocks, with no other income, no income tax is payable by a single taxpayer. Have yourselves a lovely late?-winter weekend, everyone. ole joyful

Recently a number of (mainly seniors) have been using a certain type of investment (unit trusts) that paid quite a high rate of return, some of it tax advantaged in the recipient's hands, plus some of it return of part of one's originally invested money. Such companies that structured themselves to pay out most of their earnings to shareholders were allowed to escape paying corporate tax. Some people who owned a somewhat different type of investment, stocks of Canadian companies, paying a much lower rate of return felt that they were being unfairly treated, and quite a few were leaving the type of investment that they'd been using to buy the other type. So the government changed the rules of calculating tax on the second type of income relative to 2006, with a view to encouraging a number of taxpayers to stay put. Until 2005, a single "taxpayer" who'd earned somewhere around $27,000 - 30,000. of solely that kind of income had a couple of types of credits work to allow them to have their tax liability reduced to zero. The differing method of calculation in 2006 allowed the level of the single "taxpayer's" income from solely that type of income to increase to $46,345. before becoming liable to pay one cent of income tax ... except the $600. Ontario Health Levy in this province. Would that my Member of Parliament's office were to notify every constituent annually of all the changes to the tax code, especially ways that some fortunate people could avoid paying tax at all up to over $45,000. ... ... but I'm not holding my breath, waiting for such a day! The person who told me of it was a C.A. who'd been an accountant (I think controller) of a substantial local company, prior to his retirement (with no pension) a couple of years ago. We've attended a monthly study group learning about investments for over 7 years (sometimes travel together to the meeting) ... I've learned a lot in that group. The government recently changed the tax rules relative to the first type of investment ... not allowing the corporations to avoid income tax, even if they agree to pay out most of their income. The value of that market lost billions overnight ... I can send any of you interested some delicious cartoons related to that! Recovered a substantial portion of it, later. In the light of that ... they may change the rules again next year relative to the second type of income, to increase the rate of income tax on it to more or less previous levels. Good wishes for learning more about the effective use of your income and assets. ole joyful