According to Kiplinger, claiming zero on a W-4 form means that you are telling the government to take the highest possible amount of taxes from your earnings. This means that you have less money to spend each month than if you were to claim more than zero. However, since you are likely paying more than your share, you are likely to get a refund back come tax time.Know More
Kiplinger notes that those who do not enter zero on their W-4 forms for second or third jobs risk overpaying on their taxes. The IRS is not likely to notice this, meaning these people sometimes have to spend time making a case to the agency later or forfeit the funds. However, people with multiple jobs benefit from withholding additional income from their primary job to avoid underpaying.
Prior Tax recommends that single people with no children claim zero. It also urges married people without children and a combined income falling within the 28 percent or higher tax bracket to claim zero in order to owe less at tax time.
The IRS cautions that those who claim too many allowances on their W-4 forms usually end up owing money in the future, particularly if they are eventually audited. The agency offers a withholding calculator on its website.Learn more about Income Tax
The percentage of taxes taken out a paycheck depends heavily on the employee's federal, state and local tax brackets for income and filing status, as well as the employee's withholding declaration on the W-4 form, notes Sure Payroll. Furthermore, all employees also have to pay 6.2 percent for Social Security taxes and between 0.9 and 2.35 percent for Medicare taxes, as of 2015, notes the University of Texas at Austin.Full Answer >
Regardless of if a person claims 1 or 0 on their W-4 tax form, they will still pay the same amount in taxes at the end of the year, but if the person claims 0 then he or she will have more money taken out of each paycheck and possibly have a larger tax refund, and if they claim 1 then they will have less money taken out of each paycheck but a lower or possibly no tax refund. It is most often up to personal preference whether a person wants more taken out of each paycheck and a return at the end of the year, or more to live on each month but a smaller or potentially zero refund at the end of the year.Full Answer >
According to Forbes, the amount of earnings allowed before taxation begins can vary in any given year. The single factor that affects earning requirements is the filing status.Full Answer >
Filing personal federal taxes online involves gathering tax-related documents, determining the applicable forms to complete, entering the information requested and submitting online, according to the Internal Revenue Service. Some of the factors that impact which forms are right for each person are total income, sources of income and marital status.Full Answer >