Toddlers: 12 - 24 Months

Any accountants on?

I have a paycheck deduction question. DH has never claimed any dependants on his paycheck and we always get a decent return back, is it better to continue to not claim dependants and get money back or claim someone?  I;ve heard people say that a lot of people over pay taxes by not claiming a dependant and rarely get the amount back they are due, is this true or not?

Re: Any accountants on?

  • I'm a CPA but I do more corporate/partnership work than individual.

    But, the issue that most people I work with have on getting bigger refunds is that you are basically giving a interest-free loan to the government (since you are deducting more than you need to from your paycheck - and that money goes to the gov't and is 'refunded' to you after that year is over once you do your tax return) - and most people I work with try to avoid that.

    Re: your second question - no, I don't think that's true.  

     

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  • What you claim for paycheck purposes and have deducted from your taxes does not affect how much you pay overall for the year.  When you do your tax forms at the end of the year you calculate how much tax you owe based on your deductions, income, itemized deductions etc.  Then you deduct how much you have actually paid in taxes through payroll deductions to determine your refund or additional payment due.  If you claimed no dependents and paid more through payroll, you'll just get more back at the end of the year.

    It's really a decision of whether you want more money on a month to month basis or a big refund at the end of the year.  Of course by getting a big refund, you've basically let the gov't have your money interest free for a year, but if you just like the idea of a big refund, then it's fine to claim no dependents.

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  • image Ciconrad:

    What you claim for paycheck purposes and have deducted from your taxes does not affect how much you pay overall for the year.  When you do your tax forms at the end of the year you calculate how much tax you owe based on your deductions, income, itemized deductions etc.  Then you deduct how much you have actually paid in taxes through payroll deductions to determine your refund or additional payment due.  If you claimed no dependents and paid more through payroll, you'll just get more back at the end of the year.

    It's really a decision of whether you want more money on a month to month basis or a big refund at the end of the year.  Of course by getting a big refund, you've basically let the gov't have your money interest free for a year, but if you just like the idea of a big refund, then it's fine to claim no dependents.

    Agreed with this.  Some people like to use it like an automatic savings plan for big purchases.  I'd rather save myself and earn the interest.

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