How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Lev Your Own Question

Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22617
Experience:  Taxes, Immigration, Labor Relations
Type Your Tax Question Here...
Lev is online now
A new question is answered every 9 seconds

My accountant says I should put 99 on Line 5 of W4 and not

Resolved Question:

My accountant says I should put 99 on Line 5 of W4 and not have payroll company use the regular tax calculator if I want to withhold more from my salary and so not having to pay so much for taxes at the end of the year. Can you please explain this more? As a follow up, is this actually acceptable? I mean, is this a usual procedure done by most people as well?
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.

LEV :

Hi and welcome to Just Answer!
The situation with W4 form is as following...
The larger number of allowances you are using on W4 form - the less withholding.
Actually each allowance is equivalent of $3800 in additional deductions.
By declaring 99 allowances - you effectively telling that you expect deductions in about $380,000 - that might be not correct.
If you do not expect any tax liability -- you may use "EXEMPT" but need to verify your qualifications.
If you provide additional information about your income, filing status, deductions, etc - I will help to estimate your tax liability and withholding.

Customer:

I'm sorry, I don't get the $380K deductions (?)

Customer:

and "less withholding?" from where? regular salary?

LEV :

I'm sorry, I don't get the $380K deductions (?)
If you do not have such deduction - you should not claim 99 allowances on W4 form - but the number of allowances should correspond with your expected deductions.

Customer:

join income is approx. - $40 - $50K this year.

Customer:

filing status - married filing jointly

LEV :

and "less withholding?" from where? regular salary?
Yes - W4 form affect withholding from your regular wages - not supplemental wages. Actually W4 form instruct the payroll person what amount should be withheld for income taxes - federal and state. There are special withholding tables.

Customer:

deductions? hmmmm... what would that be? we just sold our house and took home about $50K; currently living in an apartment so no mortgage and property tax to pay; no plans of buying house any soon.

Customer:

what other deductions would qualify?

LEV :

$40 - $50K this year - is that your only income or both spouses are working?

Customer:

by the way, I have 1 dependent - my 16-year old daughter. I have another daughter, 21 this month, and has filed her taxes since 2 years ago.

Customer:

40-50K is joint income

Customer:

it can go up a little more, if ever; but depending on projects coming; I have regular job and I do freelance as well.

LEV :

So you have one or two dependents?

Customer:

I only declare 1 - my 16-year old.

LEV :

Let me just estimate your tax liability
Assuming Adjusted Gross income (AGI) $50000 - assuming wages only.
Standard deduction $11900
Personal exemptions $11400 - including you, your spouse and your daughter
Taxable Income + $26700
Regular tax $3135
Child tax credit $1000 - for dependent below 17.
Tax after credits $2135 - that is your estimated tax liability

Customer:

tax liability - meaning, what I might pay IRS at tax year 2013?

Customer:

so, did my accountant suggest for me to put 99 on Line 5 so that I will have more withheld from regular salary and so I don't have paying that much by end of the year?

LEV :

What you might owe or if you will get a refund - depends on your withholding.
That is your estimated tax liability without withholding.

Customer:

by the way, I missed to say earlier that on Line 6, she asked me to put 83 if our payroll is bimonthly, so 160 if monthly I guess.

Customer:

I believe that Line 6 is the withholding (?)

LEV :

On line 6 form W4 is an additional dollar amount you want to withhold - http://www.irs.gov/pub/irs-pdf/fw4.pdf

LEV :

The number of allowances is reported on line 5.

Customer:

so, going back, with the 99 allowances and 160 every paycheck/mo, does that make my payments for taxes even out so that I may not owe much to federal at yearend for taxes?

LEV :

Because both - you and your spouse working - you need to check on W4 form "Married, but withhold at higher Single rate"
Each should use TWO allowances.
Plus - you may ONE allowance for your dependent daughter and TWO additional allowances if she is below 17 on last day of the year (to reflect child tax credit).

LEV :

so, going back, with the 99 allowances and 160 every paycheck/mo, does that make my payments for taxes even out so that I may not owe much to federal at year end for taxes?
That will be actually a "trick around the withholding system - and will result in $160*12=$3200 in withholding.

Customer:

3,200 withholding, meaning, may be refunded to me or not, depending on how much I will end up paying federal (?)

LEV :

Will your daughter be 16 on Dec 31, 2013?

Customer:

also, which part of W4 will I put "married, but withhold at higher single rate?"

Customer:

no 17 by end of the year. her bday is nov

LEV :

also, which part of W4 will I put "married, but withhold at higher single rate?"
See form here - http://www.irs.gov/pub/irs-pdf/fw4.pdf - that is on line 3.

Customer:

ok-- so with these suggestions, you are saying to put 99 is wrong?

LEV :

no 17 by end of the year. her bday is nov
That means - you will not have child tax credit for her in 2013...
and your estimated tax liability would be $3135

LEV :

ok-- so with these suggestions, you are saying to put 99 is wrong?
Yes - you may not report 99 allowances because you do not expect such large deductions.

Customer:

so what should I put in allowances? sorry, I am now getting confused

Customer:

but the 83 is okay? I mean the 160 per monthly paycheck?

LEV :

so what should I put in allowances? sorry, I am now getting confused.
Because both - you and your spouse working - you need to check on W4 form "Married, but withhold at higher Single rate"
Each should use TWO allowances.
Plus - you may ONE allowance for your dependent daughter - may be used by either you or your spouse.

LEV :

but the 83 is okay? I mean the 160 per monthly paycheck?
If you are using the number of allowances correctly - you do not need any additional withholding.

Customer:

so, to clarify further, if I pursued putting 99 for allowances, what would that mean by yearend? I mean, what are the consequences in terms of my tax filing?

LEV :

so, to clarify further, if I pursued putting 99 for allowances, what would that mean by year end? I mean, what are the consequences in terms of my tax filing?
That will not affect your tax filing and your tax liability - that will only affect your withholding.
By declaring 99 allowances - you effectively telling that you expect deductions in about $380,000 - that is correct. The result of declaring 99 allowances will result NO income tax withholding.

Customer:

again, withholding, meaning from regular salary, right?

LEV :

again, withholding, meaning from regular salary, right?
Yes - from regular wages.

Customer:

okay, I just pulled up form... and I saw Line 3 - married , but withhold at higher single rate. I don't understand though what I will put then on Line 5

LEV :

If you have supplemental wages - such as bonuses, or other one time payments - withholding is generally 25%

Customer:

no, not in my regular job

Customer:

I have no supplemental wages in regular job

LEV :

okay, I just pulled up form... and I saw Line 3 - married , but withhold at higher single rate. I don't understand though what I will put then on Line 5.
Each should use TWO allowances.
Plus - you may ONE allowance for your dependent daughter - may be used by either you or your spouse.

Customer:

so, I can do 3 for my LIne 5; and 2 for my husband's Line 5

LEV :

so, I can do 3 for my Line 5; and 2 for my husband's Line 5
That would be correct way of using W4 form in your situation.

Customer:

going back to withholding of 25%, so I will have none of that because I don't have supplemental wage, right?

LEV :

going back to withholding of 25%, so I will have none of that because I don't have supplemental wage, right?
That is correct.

Customer:

actually, neither will my husband because he doesn't have supplemental wages as well.

Customer:

wait, what about director's fee? is that considered a supplemental wage?

LEV :

wait, what about director's fee? is that considered a supplemental wage?
That depends on the payer. If it is paid every pay period - that is a regular wages. But if paid ones per year - that might be a supplemental wages.

Customer:

not regular, but can also be none in one year. last we had was 2 years ago, I think.

Customer:

finally, just out of curiosity, would 99 allowance then be more practical if I still owned a house?

Customer:

my mortgage then was definitely more than $3K a month; with property taxes, about $4K/mo

LEV :

finally, just out of curiosity, would 99 allowance then be more practical if I still owned a house?
By declaring 99 allowances - you effectively telling that you expect deductions in about $380,000 - which is NOT correct. The only purpose fro that is to "trick" the withholding system and not to have any withholding.
If you were owned the house - and if you itemize your deduction - you should use ONE additional allowance for each $3800 in deductions above your standard deduction.
So in this case - you need to estimate your itemized deduction, subtract the amount of standard deduction and divide the result by $3800 - that will be the number of additional allowances which should be divided between you and your spouse.

LEV :

So assuming your itemized deduction would be $30,000 (that includes mortgage interest, property and real estate taxes, state taxes, charitable contributions, etc) - that might result 4 or 5 additional allowances which must be divided between you and your spouse.

Customer:

and now that I don't own a house, I don't think I would have any qualified deduction (?)

Customer:

what would be qualified deductions for a non-homeowner?

LEV :

what would be qualified deductions for a non-homeowner?
Most likely - you will use standard deduction and personal exemptions.
Standard deduction $11900
Personal exemptions $11400 - including you, your spouse and your daughter

Customer:

ok. by the way, in filing taxes-- is it important to use same address in 1040 and W-9 and W-4? I plan to get P.O. Box for my business (sole proprietor) and willb eusing for my clients and vendors. Of course I 'd have to give clients my W-9 also through course of dealing with them-- can I put my P.O. Box in W-9? But then since me and my husband are filing taxes, obviously we use our home address for that. Will that be a problem?

LEV :

You may use ANY address including PO box. There is no law to require any specific address to be sued. That is your choice.

Customer:

Ok, thanks. You've been a great help.

LEV :

You are welcome.

Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22617
Experience: Taxes, Immigration, Labor Relations
Lev and 5 other Tax Specialists are ready to help you

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
< Last | Next >
  • http://ww2.justanswer.com/uploads/KU/KUMI95/2013-9-30_195031_kumar.64x64.jpg Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
  • http://ww2.justanswer.com/uploads/CU/Cuttinggirl/2011-10-29_03719_wcrop2.64x64.jpg Wendy Reed's Avatar

    Wendy Reed

    Enrolled Agent

    Satisfied Customers:

    3052
    15+ years tax preparation and tax advice.
  • http://ww2.justanswer.com/uploads/CATax/2009-08-04_204548_Mark.jpg Mark D's Avatar

    Mark D

    Enrolled Agent

    Satisfied Customers:

    985
    MBA, EA, Specializing in Business and Individual Tax Returns and Issues
  • http://ww2.justanswer.com/uploads/IN/insearchoftheanswer/2013-8-16_0233_attorney.64x64.jpg Richard's Avatar

    Richard

    Tax Attorney

    Satisfied Customers:

    3229
    29 years of experience as a tax, real estate, and business attorney.
  • http://ww2.justanswer.com/uploads/MY/MyVirtualCPA/2012-7-5_44024_cookmegan1.64x64.jpg Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    6121
    Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JG/jgordosea/2012-6-7_43138_GordosVeritas.64x64.jpg jgordosea's Avatar

    jgordosea

    Enrolled Agent

    Satisfied Customers:

    2783
    I've prepared all types of taxes since 1987.
  • http://ww2.justanswer.com/uploads/OZ/ozaukeecpa/2012-6-7_193219_Picture1croppedandshrunk.64x64.jpg MequonCPA's Avatar

    MequonCPA

    Certified Public Accountant (CPA)

    Satisfied Customers:

    2231
    CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.