Best ways to get the most money when you fill out your W-4 form
The W-4 Form
This is something I've had to ask people a lot about to get a good answer. Every time I fill out this paper, the W-4 AKA Employee's Withholding Allowance Certificate, when I get a new job, I always forget what I should put. My mom said to only claim one, but my last employer advised me to list more if possible. In researching this matter, I think I finally have it.
They say that you don't want to claim too many allowances, but that you don't want to claim too few. If you claim too many, If you're not very accurate, you can end up paying a penalty fee as well.
According to Jim Schnepper of MSN Money, you want to claim as many allowances as you truthfully can because more withholding allowances means more money for you. Less tax money is taken from your paychecks, so you get more money with every pay period. Of course, this means that your tax refund will be smaller at the end of the year, but you'll get more in the end. Getting more in the form of a tax refund means that you've given the government an interest-free loan all year until the refund comes. The government is allowed to do whatever it wants with your money until then.
Thankfully you can change the number of allowances you claim with every new job and every new form you fill out, so you're not stuck with what you put the first time you applied for a job.
There are a number of reasons you can claim an allowance, including for dependents or a spouse (and yourself!), having only one job, being the head of a household, pay alimony or have dependent expenses, tax credits, business expenses or losses, or IRA contributions. Schnepper said itemized deductions is your best opportunity to get more money. If you itemize deductions, you'll have to reduce withholdings.
The form is much easier if you're single, have only one job, or only one person in the family makes money. It gets more complex from there. Don't forget about any extra paperwork you might have to do in these cases, such as if you are married and you both work (then you'll have to fill out the Two-Earners/Multiple Jobs Worksheet.
Do not lie and record more allowances than you can truthfully claim. Just don't be afraid to enter a 1 if you can, and remember that you want to give as little money as possible to avoid getting in trouble with the government.
Also, the number of allowances you claim may differ from the number of exemptions you claim when you file taxes; working on the W-4 is more like predicting while filing in April is subtracting actual expenses.
- The W-4 Form
Straight from the IRS!
- Get next year's tax refund now - MSN Money
- Tax Basics: The w-4 worksheet - how to figure it out
Here's a way to figure out all you need to know about the W-4 tax form worksheet
- IRS Withholding Calculator
- Basic Explanation of W-4 tax Form : Personal Allowance Worksheet A thru D ...