Is it better to claim a lot of exemptions on your taxes and owe, or claim none and get a refund?
Answer:
If you are getting a big refund in effect all you are doing is giving Uncle Sam an intrest free loan. Or you can think of it as a zero percent savings account.
Claim the right number and have just enough to pay the taxes.
Depends on whether you want Uncle Sam to get your money a little at a time or all at once. Pick your poison, as they say.
My preference is to get a little money back--under $100. I don't want the government to hold my money but I'd prefer not to pay out either. With a small amount back, it gives me a little extra to go out to dinner. :)
The hard part that I've had is how to pick the right number of deductions. In the past, it hasn't quite worked to claim all the exemptions and break even. Every year I've tweaked it a little to try and get closer.
Claim none & get a refund. What if you claim alot of exemptions & end up having to pay back Alot of money?? A friend of mine did both one year. For the first 6 mos, she claimed zero the next 6 mos she claimed 5. She said it worked for her......
You should be cautious before you begin to play games with this as there are a number of penalties associated with misinformation regarding your withholding allowances.
The Federal government does not want you to owed too much tax nor do they want you to have too much refunded back. It’s a problem either way with the feds.
Be honest willed be save.
If you set –0- on line 5 of W-4 then you will have a refund back from the IRS. If IRS fail to get you the refund back within a reasonable time after filing then they will have you interest like the refund was a loan. They don’t like that.
If you set 2 or 3 on line 5 on your W-4 then you will probably owed tax and the IRS will treated like a loan and charge you interest and penalty on the tax owed. Why because tax is due when you earn it, your employer (boss) is do you a favor to take out taxes for you when you get pay. If you fail to do that then it’s a loan you take out with the feds.
Get it?
Hey high five!
Try to come as close as possible to breaking even. If you owe a lot at the end, could be hard to come up with it, plus you'll get penalized. If you get a big refund, you just gave the government an interest-free loan.
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