Tax form question

[Aceon6]

Sometimes, though, you don't have control over what you pay 'into the system'. Most of my refund comes from my deductions of mortgage interest and property taxes. I'd like to pay less of those each month, but I don't have a choice about it. And I'm single, so I think my only options for withholding allowances are 0 and 1 (which I have).

Actually, you can claim more if you're expected deductions justify it. Use the worksheet on the back of the W-4. Anyone in a state income tax state who owns a home should look into it.

[genevieve]

Sometimes, though, you don't have control over what you pay 'into the system'. Most of my refund comes from my deductions of mortgage interest and property taxes. I'd like to pay less of those each month, but I don't have a choice about it. And I'm single, so I think my only options for withholding allowances are 0 and 1 (which I have).

I'm single, own a home and I claim 2 deductions.

A lot of people don't want to or don't know how to figure out what they will owe and are simply at the mercy of how their employer deducts during the year, as well.

No one is at the mercy of what the employer deducts. People can take the most passive route possible for determining their withholding, but the employer can't just decide what to deduct for them.

[PDilemma]

I'm single, own a home and I claim 2 deductions.


No one is at the mercy of what the employer deducts. People can take the most passive route possible for determining their withholding, but the employer can't just decide what to deduct for them.

If employees are passive about it --which is usually due to more to not understanding the process, the tax tables or that they can request higher deductions than willfully being passive--the employer will withhold as they see fit based on what deductions the employee indicates on paperwork. And that is what I meant.

But this is, quite frankly, a pointless argument. Some of you are never going to comprehend that not everyone has the knowledge or skill set to understand tax policy and take control of their own finances in that area. It is foolish to think that in a culture where most people don't know how to balance a checking account or manage their credit, everyone is going to understand withholding and tax tables.

[genevieve]

If employees are passive about it --which is usually due to more to not understanding the process, the tax tables or that they can request higher deductions than willfully being passive--the employer will withhold as they see fit based on what deductions the employee indicates on paperwork. And that is what I meant.

But that's not as the employer sees fit - it's based on what the employee puts down. My point is that the employer cannot make any decision about what an employee deducts - it has to come from the employee. Now, the employee may not be making most advantageous deduction for themselves (through choice, ignorance or lack of comprehension), but the employer does not get to look at the W4 and say "this person doesn't know what they're talking about, I'm going to deduct a different amount instead".

But this is, quite frankly, a pointless argument. Some of you are never going to comprehend that not everyone has the knowledge or skill set to understand tax policy and take control of their own finances in that area. It is foolish to think that in a culture where most people don't know how to balance a checking account or manage their credit, everyone is going to understand withholding and tax tables.

And how is perpetuating the notion that employees are at the mercy of their employers when it comes to tax deductions going to help?

[Hannahclear]

I was just talking about this with an accountant, when we filed this weekend. He said that most people don't understand that there is a *number*. It's the amount you make with your tax obligations removed. You can get that number spread out over 52 weeks, or you can get a chunk of it back in the spring. But it's still your number.

And with interest rates being what they are these days, unless there is high-interest debt, I don't think it matters which you choose. It's personal preference. I prefer the money over the course of the year.

[Erin]

I had a friend who wanted to deduct an additional $100 per paycheck so she would get a bigger refund in the spring, even though she was already getting over a $1000 refund. I asked her why she couldn't just open a new savings account and have $100/paycheck deposited there (we can split our paycheck direct deposits) and she said having the government hold it for her made her feel safer This is one of the most disciplined person I know, who would never spend money she had designated as off limits.

I generally agree with the sentiment that the decision mainly comes down to personal preference, as long as people understand what they're doing, but this kind of thing is a little bit crazy.

And with interest rates being what they are these days, unless there is high-interest debt, I don't think it matters which you choose. It's personal preference. I prefer the money over the course of the year.

Yes, I agree. Although for some people who I know who are not very disciplined savers, I sometimes think it really is better to lend it interest-free to the government, just to keep them from spending it.

I do agree in theory that it's generally better to get the money spread out, but in practice, I've ended up with a reasonably large refund more often than not, for a variety of reasons. Job changes, tuition credits, or a last minute deductible RRSP contribution are a few of them. Canadian payroll withholding rules seem to be a little stricter than US, as in some cases I'd need to get a letter from my tax services office to get the withholding reduced because my reason isn't on the form that you can provide my employer. And that is way too much work.