New Home Owner W4 Questions

Posted by davethomasjr on January 3, 2008, 4:45 pm

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I will be closing on my first home come Jan. 18 and would like to
ammend my Fed Withholding in order to minimum my income tax return.
I've been struggling over the past hour using the W4 worksheet and the
IRS calculator located at:
http://www.irs.gov/individuals/page/0,,id=14806,00.html

When I used the IRS worksheet, I arrive at 7 allowances. However,
when I used the IRS website I arrive at 0. I cannot figure out what
gives. Here are the values I'm using:

W4 Worksheet
---------------------
1: Itemized deductions - $23000
2: Single - $5450
4: Adj. to income - $3000 (capital loss carryover)
6: Nonwage income - $700
9: Personal allowances - 2
10: Total allowances = 7

IRS Website W4 Calc
--------------------------------
Filing Status = Single
Dependent = No
# of jobs = 1
# of dependents = 0
65 or older = No
Blind = No
Child & dependent care = 0
Other credits = 0
Total salary = $98,280
Total retirement plans = $4,914
Total earned income other than salary = $24,570 (bonuses, taxes
already taken out)
Other nonwage income = $700
Adjustments to income = $3800 (capital loss carryover)
Total itemized deductions = $23,000
======Suggested allowances = 0 for $18,933 projected income tax

Why so entirely different?

My guess is because where the IRS website asks for "Enter the total of
any other earned income (including bonuses, but excluding salary), you
received or expect to receive in 2008". This should only be for bonus
which do not have FICA taken out of them.

In my case, taxes are taken out of my bonuses when they arrive in my
paycheck. So I when ahead and tried adding the $24,570 to the total
salary instead. The result was to use 7 allowances.

So I think I'm safe claiming the 7 allowances as suggested in order to
maximize my semi-monthly take home pay and minimize my IRS refund.
What do you all think?

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