I will be closing on my first home come Jan. 18 and would like to ammend my Fed Withholding in order to minimum my income tax return. I've been struggling over the past hour using the W4 worksheet and the IRS calculator located at:
W4 Worksheet
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1: Itemized deductions - $23000
2: Single - $5450
4: Adj. to income - $3000 (capital loss carryover)
6: Nonwage income - $700
9: Personal allowances - 2
10: Total allowances = 7
IRS Website W4 Calc
-------------------------------- Filing Status = Single Dependent = No # of jobs = 1 # of dependents = 0
65 or older = No Blind = No Child & dependent care = 0 Other credits = 0 Total salary = $98,280 Total retirement plans = $4,914 Total earned income other than salary = $24,570 (bonuses, taxes already taken out) Other nonwage income = $700 Adjustments to income = $3800 (capital loss carryover) Total itemized deductions = $23,000 ======Suggested allowances = 0 for $18,933 projected income tax
Why so entirely different?
My guess is because where the IRS website asks for "Enter the total of any other earned income (including bonuses, but excluding salary), you received or expect to receive in 2008". This should only be for bonus which do not have FICA taken out of them.
In my case, taxes are taken out of my bonuses when they arrive in my paycheck. So I when ahead and tried adding the $24,570 to the total salary instead. The result was to use 7 allowances.
So I think I'm safe claiming the 7 allowances as suggested in order to maximize my semi-monthly take home pay and minimize my IRS refund. What do you all think?