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Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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I will be receiving a lump sum payment of $2500 for some contract

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I will be receiving a lump sum payment of $2500 for some contract work on an upcoming paycheck. My current gross pay is 1241.49. I am paid semi-monthly. I currently claim 5 allowances. I would like to increase my allowances, but I'm not sure how high to go for this one pay period. Based on the W-4 worksheet, I could claim 10. I usually get a large refund, so I would like to increase this allowance as much as I can. Thanks!
Hello advisor,

You can claim as many exemptions as you want to on your W-4 form. Basically for each allowance that you claim, it will exclude an additional $3,700 from your annual income as being taxable. Broken down for semi-monthly payroll periods of 24 pay periods each year, that amounts to exclusing $142 from each paycheck for each additional allowance that you claim.

So if you want to exclude the entire $2,500 from tax, you would increase your exemptions by 17 for that one pay period.

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Thank you advisor.

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