Tax Law (Questions About Taxes)/Withholdings
I have a simple question. I was advised two years in a row to change my with holdings. I have two. One is I'm single with one job and I believe the other is no one can claim me as a dependent.
My tax preparers have advised to change this. Last year's accountant said to change it to "1" or "0", I believe. I followed up with him about changing it online and asked for his help and he didn't contact me. So I did not change it last year.
This year's accountant said to change everything to "0". The reason they've advised to change this is so that I receive more back at the end of the year (that is how I understood it to the best of my knowledge).
I can change this online on my company website. I was just wondering though, before I do this, is this honest? I feel like I've answered the questions correctly the first time around on my initial application. I certainly want to keep things clean with my employer.
Please advise...thank you.
Why do you want more back at the end of the year?
Since the only thing you get back is any excess that you paid in during the year? That is absolute drivel from your accountants. Now, some people don't have the self control to balance up their account with the IRS at the end of the year if they owe a little more. So the recommendation that is made for incompetent people is pay extra along the way, so you don't end up short at the end of the year.
But this year is a special year, and one that most people don't know about. This year, any tax refund will be kept by the government if you are not signed up for Obamacare.
If you didn't know that don't be surprised, that is not one of the talking points for the Sunday morning talk shows yet.
To recap: The only way people get a refund is to overpay during the year.
If you have not signed up and are paying for Obamacare your tax refund will be kept by the Government, large or small. It will not be credited toward your healthcare it is simply kept.
From there, yes you CAN decrease your dependents and pay more taxes during the year.
I am glad you asked and are making an informed decision. This certainly won't adversely affect your employer. You filled out the form, and you are paying the taxes. All your employer is obligated to do, is withhold the calculated amount according to your number of dependents.