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im single and live alone so i been claiming 2 for witholdings or "exemptions" as it says on my paystub. is there some kind of formula to use to maximize my checks and break even at the end of year and minimize a return?
Edit:do i just wait and see what i get for a return this year and make that adjustment accordingly using that chart that was posted by wallyhopp? i dont really have a baseline to go off of cause as opposed to last tax year-this year i made about 20k more.
The withholding calculator helps too
https://apps.irs.gov/app/withholdingcalculator/
If you know your projected tax liability for the year (Your tax liability is basically your Total Income - Total Deductions - Total Exemptions. That gives you your taxable Income. From there, its a tax bracket game, where you can be taxed at different rates.), you can basically divide that by 52, and go to the withholdings chart table and see where it takes you.
For instance, if you made $40,000 last year, your tax liability is around 4,000. If you made $60,000, it would be around $8,000. That equates to about $77/weekly paycheck vs. $154/weekly paycheck that should be withheld. For a $40,000/year salary, you can go to the $770 weekly chart, and see where ~$77 lines up with the withholding allowance #. In this example, you would be closest to breaking even at 2 allowances.
The same can be said for the person making $60,000/year. Find $1150 on the single weekly chart, and find the number closest to $154. Here, again, 2 allowances would get you very close to your tax liability.
I downloaded this Turbo Tax taxcaster app on my phone and it gives good insight as you change various things on the fly
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