skybox
New Member
Cash: $ 1.70
Posts: 8
Joined: 12 Sep 2010
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| W4 for recently married |
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Hi guys,
I am new to this forum and saving money in general. I had a basic question.
I recently got married to my wife who is still a full time student and makes about $500/month. I make $50k a year ($4100 a month - gross).
My question is, right now I am filing as single on my W4 with no deductions and getting taxed heavily. Can someone give me suggestions if filing as married would help me get less taxed? I also bought a house this year so I am not too worried about owing taxes this year.
Any suggestions and/or tips would be greatly appreciated. I hope to learn a lot from this forum!
Thanks!
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Sun Sep 12, 2010 9:22 pm |
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oldguy
Senior Member
Cash: $ 751.85
Posts: 3656
Joined: 21 May 2006
Location: arizona
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You will file as 'married', it applies for the whole year. Your deduction/exemptions will increase by over $9000. And your income only increases by $6000. So, with $3000 less taxable income, your taxes will be lower by probably $750.
The house may or may not affect your tax bill, if the interest that you pay during 2010 exceed the ~$12,000 std deduction, it will help - so if you bought a BIG house and got it early in the year, it will help.
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I also bought a house this year so I am not too worried about owing taxes this year.
Well, you are looking at this backwards - but for some unknown reason, so do most US taxpayers, the average refund is about $2800. It amazes me that people choose to overpay every month all year so that they will get $2800 of their own money refunded to them in April. Wonder why they don't simply have that $233/m auto-deposited into their savings beginning in January?
The truth is - most americans do not understand their own tax forms, they go to HR Block. And this is really funny - some of them pay HRB an extra $50 to get their own $2800 refunded faster?
I fill out my W4 at work to adjust my withholding so that I owe a small amount in April, I like to owe about $500 to $1000. But you may select whatever number of deductions that you want to on your W4 to adjust your withholdings - if you like a big refund, use 0, if you like to owe some, use 3 or 4. The form has a good set of instructions to help you make your choice.
BTW, it would be wise to use TurbTax and do your own taxes - not to save the $100 at HR Block but to give yourself an education in taxes - it will serve you well over the next 50 yrs, you will understand how each of your investments will affect your tax bill - it's way easier to become a millionaire if you grasp the significance of your actions in advance.
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Sun Sep 12, 2010 11:47 pm |
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skybox
New Member
Cash: $ 1.70
Posts: 8
Joined: 12 Sep 2010
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Thanks oldguy for the informative post.
Yea it makes sense for the gov't to not tax me so much on my paycheck so I can save that money myself. To me, it makes no sense on getting a big return and getting taxed on that also the next year - it's like getting taxed on money you paid taxes for 
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But you may select whatever number of deductions that you want to on your W4 to adjust your withholdings - if you like a big refund, use 0, if you like to owe some, use 3 or 4
Thanks. That was really helpful as well. I will read the W4 more closely. I am learning towards having a deduction of 2.
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BTW, it would be wise to use TurbTax and do your own taxes - not to save the $100 at HR Block but to give yourself an education in taxe
Yes I used TurboTax on my previous return and was surprised how simple it was. When I got my house the loan lady told me to file for the federal $8000 tax credit via H&R Block to be on the "safe side" and get my return. The fee was almost 200! I did this in TurboTax and saved some money. It was really easy.
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Mon Sep 13, 2010 1:45 am |
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oldguy
Senior Member
Cash: $ 751.85
Posts: 3656
Joined: 21 May 2006
Location: arizona
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Since you're recently married - try this. Think about how much wealth you would like to have in 30 yrs. Then back into it mathematically - eg, say you want $2M in 2040. That will require $9100/yr if you use 11% investments, or $16,500/yr if you use 8% investments. You can ratio it according to your own goal - eg, $4M takes $18,200/yr at 11%, and so on.
Make the plan, then you both vow to do it w/o fail, have it autodeposited in your accounts - 401k, 403b, roths, taxable accouunt, etc. The trick is this - most failed marriages are over money. If you follow your plan, you can enjoy spending all other money that you earn together - you'll enjoy it because you are safe in the knowledge that you are on-track to have $2M, $4M, or whatever your plans is. Good luck!
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Mon Sep 13, 2010 3:38 am |
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skybox
New Member
Cash: $ 1.70
Posts: 8
Joined: 12 Sep 2010
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Thanks oldguy again for the savings tips. I plan on changing my W4 this week with 3 deductions and filing as married.
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Originally posted by coaster
skybox, you can use your Turbo-Tax to "what-if" your going-forward scenarios as well as preparing your income tax return. Just start a new return with a different file name and fill in the numbers you want to play with.
Also, there's a W-4 calculator on the IRS web site. It's a bit hard to find, but lucky for both of us I already found it for another recent thread:
http://www.money-talk.org/msg68129.html#68129
That is a great idea to simulate tax returns with Turbo Tax. Never thought about it.
Thanks!
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Tue Sep 14, 2010 6:12 pm |
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Jammy
Full Member
Cash: $ 15.90
Posts: 72
Joined: 15 Sep 2010
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| Turbo Tax |
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Yeah, I have heard a lot about Turbo-Tax, but I am not sure how effective it is. Best of luck at it.
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Fri Sep 17, 2010 7:20 am |
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mukeshkkashyap
Full Member
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Joined: 05 May 2010
Location: india
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thanx for sharing your info
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Mon Sep 20, 2010 6:57 am |
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