Question Hello, I'm starting a new job and I was filling out tax forms and a question came up as to whether I claim zero dependants or I put down 1 for myself. I'm under the impression that if I put down zero I will post in more taxes out of each paycheck and possibly get a refund at tax time, and if I put 1 I would pay in less but possibly get less of a refund or even have to pay in at tax time. do you know which would be more efficient and save me money in the long run?
You are correct in general with your assumptions. Based on other factors like spousal income, itemized deductions, etc you will have to determine which is actually best for your specific situation. As far as long run savings and efficiency which is your question, it is most efficient to optimize to not owe while keeping your refund low. By not owing you will save possible penalties and interest and by keeping your refund low you get more in each paycheck which could be saved or invested. The IRS does not pay you interest on excess withholding for the year.
A degreed accountant with significant experience in taxation compliance and resolution at all levels of government regulation.
Experienced Tax Advisor, Consultant and Preparer for over 15 years. In private practice for nearly 12 years now. Experienced in all areas of taxation: International, Federal, State, Local, etc
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