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I am starting a new position on June 29th of this year. I have not worked for the previous few years because I was a full-time grad student. I went through the IRS calculator for filling out the W-4 and it says I should claim 5 allowances. I am a single male, no dependents, no other sources of income. I also went through the IRS worksheet for the W-4, and it suggests to claim 2. I'm assuming this number is based on the assumption that I will be working the entire year. I'm just wondering what I should claim. Should I claim 2 and then provide a written request to my employer to follow the "part-year method" since I will only be working for 6 months out of the year? Or should I claim 5 as the calculator suggests and take no further action?

Respectfully, Chris

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For this year, it doesn't really matter. I'm assuming you had no tax liability in 2014. Therefore, you won't owe a penalty even if you have a big underpayment for 2015.

If your goal is to have maximum cash-flow during the year, you can be really aggressive and write a high exemption such as 15, so nothing is withheld. If you follow this route, make sure you submit a new W-4 for 2016 at the end of this year.

If you don't like surprises at tax time, Pete's answer is good.

You don't need to provide any explanation or request to HR.

  • -1 for the advice to write EXEMPT, otherwise it would have been a +1. – mhoran_psprep Jun 8 '15 at 20:33
  • @mhoran_psprep Heh I edited that out a few minutes before your comment; I remembered it had some additional requirements, which would make it technically perjury if one expects any tax liability. Or, are you against uneven tax payments? – user29504 Jun 8 '15 at 21:09
  • Your edit was at the same time as my comment. You were suggesting purjury. Another risk with writing exempt when you expect to make enough to pay income tax is that the company can decide to reject it and assume single with 0 exemptions. The exact opposite of your goal. – mhoran_psprep Jun 8 '15 at 21:28
  • I have written 99 allowances on many W-4 forms. While I may not be legally required to provide an explanation to HR/payroll, I have been asked for confirmation every time. – stannius Jun 9 '15 at 16:31
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To me this is kind of a multi-step math problem.

I would first do a mini-tax return for 2015. Given your expected income what amount of tax would you pay given the credits and exemptions that you can claim. You can use form 1040-ES for this purpose.

Then I would use a pay check calculator to find the proper amount of exemptions plus some cushion. I use this calculator.

So for example lets assume that you have 20 paychecks left until the end of the year and you will most likely have to pay $2000 in taxes. Lets say you also want a 10% buffer so you really want to withhold $110 per paycheck.

Then you have a choice: You can claim 3 exemptions which would withhold 130 per paycheck, or 4 which would withhold 105.

I would chose 4 exemptions and fill in the box on the w-4 to withhold an extra $5 per paycheck.

This method works well in a variety of different situations. Dual income households with a healthy income rarely have enough withheld and it can be quite shocking when April 15th rolls around unless you plan ahead.

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