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I am 22, got married in 2016, bought a house and had a kid in 2017, work a full time job and a part time job as an independent contractor, my wife owns a sole proprietorship.

If I am claiming 1 for my main full time job, can I expect a refund? I understand the basics of this but am not sure how the house and new baby factor in.

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  • To answer this properly, someone would need to know how much income you get from each source, and if/how much you and your wife pay estimated taxes for your contract work and business. The easiest approach might be to estimate total tax liability and work backwards from there. You can use this tax calculator to estimate, but remember that with the sole proprietorship and the contract work, you will owe self employment tax on top of the federal income tax. calcxml.com/calculators/…
    – Hart CO
    Sep 19, 2017 at 17:32
  • House doesn't factor in, kid is 1 exemption, there's a worksheet attached to the form that helps you calculate how much you should withhold based on your wife's (expected) earnings.
    – Kevin
    Sep 19, 2017 at 17:33
  • @Kevin Owning a house often bumps people from standard deduction to itemized deductions, it may or may not have impact, but it certainly should be factored in.
    – Hart CO
    Sep 19, 2017 at 17:35
  • @HartCO well, indirectly yes, if you use it for withholdings on the worksheet. But it doesn't appear directly on the form.
    – Kevin
    Sep 19, 2017 at 17:38
  • @Kevin Are you aware of an exemption worksheet that factors in self-employment? I've not seen one that works well.
    – Hart CO
    Sep 19, 2017 at 17:44

2 Answers 2

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It's not possible to determine whether you can "expect a refund" or whether you are claiming the right number of exemptions from the information given.

If your wife were not working and you did not do independent contracting, then the answer would be much simpler. However, in this case, we must also factor in how much your contracting brings in (since you must pay income tax on that, as well as Medicare and, probably, Social Security), whether you are filing jointly or separately, and your wife's income from her business.

There are also other factors such as whether you'll be claiming certain child care expenses, and certain tax credits which may phase out depending on your income.

If you can accurately estimate your total household income for the year, and separate that into income from wages, contracting, and your wife's business, as well as your expenses for things like state and local income and property taxes, then you can make a very reasonable estimate about your total tax burden (including the self-employment taxes on your non-wage income) and then determine whether you are having enough tax withheld from your paycheck. Some people may find that they should have additional tax withheld to compensate for these expenses (see IRS W-4 Line #6).

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J - Approaching the answer from the W4 perspective (for calculation purposes) may be more trouble that it's worth. I'd strongly suggest you use tax software, whether it's the 2016 SW or a current year one, on line, to get an estimate of your total tax bill for the year. You can then look at your current run rate of tax paid in to see if you are on track. If you have a large shortfall, you can easily adjust your withholdings. If you are on track to get a large refund, make the adjustment so next year will track better. Note, a withholding allowance is equal to a personal exemption. Some think that "4" means 4 people in the house, but it actually means "don't tax 4 x $4050" as I have $16200 in combined people or tax deductions.

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  • Is there a good software you know of? TurboTax does not allow me to do that kind of projecting.
    – J. Tate
    Sep 20, 2017 at 13:10
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    The online TurboTax is good, but limited. Your situation is pretty complex, if you are not comfortable to move the numbers around, being mindful of self-employment adjustments, etc, I'd use a 2016 computer version of TurboTax or H&R software. Sep 20, 2017 at 13:14

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