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This is related to the question: In the US, how do we make tax withholding less if we lost our job for a few months?

So the form that is similar to a Federal W-4 form is the California DE-4 form.

For California, it seems that for a single person, the Allowance is 1.

However, when I calculate additional allowance, let's say if my mortgage interest is $42,000, and deduct $4803 from it as on Worksheet B line 2, then it is $37,197. So if we divide $37,197 by $1000 as on Worksheet B line 8, we get 37.

So does that mean we are claiming 1 + 37, which is 38 Allowances? That seems a bit weird, as I expected to only increase 1 to 3 or 7 or 8, but not to such a big number 38. Does 38 actually seem correct?

Related is the W-4 form... so it looks like we'd claim $42,000 - $12,950, which is $29,050 on line 4b on the W-4 and that's it?

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  • Note that for federal taxes, if the mortgage balance is more than $750k, only part of the mortgage interest is deductible.
    – user102008
    Jul 29 at 7:57
  • is that a new rule? Oh and it is not too fair for places where prices of everything is high (like California when a 1200 sq foot house can be $1.5 million)... also, if it is more than $750k but there are 2 or 3 houses and each one is no more than $750k then it is ok? Jul 30 at 1:08
  • See 1040 Schedule A instructions for line 8, and Publication 936, for more information. Also, you can only deduct mortgage interest on your main or second home. If you have two mortgages, you add the average balance of each, and apply the limit to that.
    – user102008
    Jul 30 at 2:07

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