The difference between claiming 0 and 1 on a tax return is that 0 means the taxpayer claims no exemptions while 1 means the taxpayer claims one exemption, according to the IRS. A taxpayer may take one exemption for each person for whom he is financially responsible.Know More
The IRS notes that each exemption reduces a taxpayer's taxable income by $3,650, as of 2014. A single person who is financially responsible for just himself claims one exemption. A person who is claimed as a dependent on another person's tax return, such as a child, must claim zero exemptions. A person who is financially responsible for himself and others may claim one exemption, plus an additional exemption for each of his dependents.
When employees fill out W-4 forms, they should be aware of how many exemptions they are claiming on their tax return for that year, according to Rapid Tax. The number of exemptions the employee claims is used to determine how many allowances need to be claimed on a W-4 form. For example, a person declared a dependent on another taxpayer's return would claim zero allowances, while a person who is single and financially responsible for himself only would claim one allowance.Learn more about Income Tax
A taxpayer who is unable to pay his tax bill immediately can request that the IRS set up a monthly payment plan through which the amount due is paid in installments, according to the IRS. These plans are generally approved, but there are fees and interest added.Full Answer >
Some social security or tier-1 railroad retirement benefits are taxable if the taxpayer received additional income during the year, according to the IRS. For 2014 taxes, if all income plus half of the taxpayer's retirement benefits equals more than $25,000, it is possible that part of the benefits are taxable.Full Answer >
Federal withholding is calculated using the W-4 questions answered by the taxpayer, as stated by the IRS. The number of allowances claimed on this form determines how much is withheld from each pay check. The IRS references tables that account for family size, income and filing status.Full Answer >
A taxpayer can use the EITC Assistant on the IRS website to determine if she qualifies for the IRS earned income credit, according to the IRS. To qualify for the credit, she must either file as single, head of household, married filing jointly, or qualifying widow(er), as of 2015.Full Answer >