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Ask Lane Your Own Question

Lane
Lane, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 3705
Experience:  Providing Financial & Tax advice since 1986
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Hi I just bought a condo and want to make sure I am filling

Resolved Question:

Hi I just bought a condo and want to make sure I am filling out my revised W-4 correctly
Submitted: 8 months ago.
Category: Tax
Expert:  Lane replied 8 months ago.

Lane :

Hi,

Lane :

basically every allowance on the w-4 is like adding another exemption , the person/dependency exemption for 2013 is $3900

Customer:

So if I have another $45,000 of annual interest at a 40% tax rate would I add 4 new allowances?

Lane :

So, IF it happened that your additional deductions from having the condo (mortgage interest, property taxes) ended up being 3900 - which i won't, exactly, of course you would add one exemption to keep things as they were before

Customer:

oh i see

Customer:

so i would add 11 allowances

Customer:

?

Customer:

mas or menos?

Lane :

nope you are right ... you just beat me to it

Customer:

i think there is also a phase out based on income

Customer:

ha

Customer:

ok

Customer:

what about the phase out?

Lane :

I wasn't factoring in the taxation (tax benefit - deduction times rate) to get to the actual income withheld against

Lane :

you nailed it

Customer:

so 11 allowances...

Customer:

to adjust

Customer:

??

Lane :

no, at 45000 x . 4 = 18000 / 3900 = 4.61 you mailed it

Customer:

ok got it

Customer:

thanks

Customer:

and is there a phase out?

Lane :

Single filers with adjusted gross income (AGI) in excess of $250,000 or couples who are married filing jointly and have AGI in excess of $300,000 will also face phaseouts of their deductions and personal exemptions. The phaseout of the personal exemption (sometimes called “PEP”) means for every $2,500 of AGI (or portion thereof) above $250,000 ($300,000 for married couples filing jointly), the $3,900 per-person personal exemption will be reduced by 2%. For married couples, personal exemptions will be fully phased out once their AGI exceeds $422,501, or for single filers if AGI exceeds $372,501.

Lane :

we crossed in the "mail" again .. did you see that?

Lane :

Single filers with adjusted gross income (AGI) in excess of $250,000 or couples who are married filing jointly and have AGI in excess of $300,000 will also face phaseouts of their deductions and personal exemptions. The phaseout of the personal exemption (sometimes called “PEP”) means for every $2,500 of AGI (or portion thereof) above $250,000 ($300,000 for married couples filing jointly), the $3,900 per-person personal exemption will be reduced by 2%. For married couples, personal exemptions will be fully phased out once their AGI exceeds $422,501, or for single filers if AGI exceeds $372,501.

Customer:

one sec

Lane :

The phaseout of itemized deductions (often called the “Pease” phaseout) reduces the value of itemized deductions by 3% of the AGI above $300,000 for couples, and $250,000 for single filers—to a maximum reduction of 80% in value. ALSO, itemized deductions for certain medical expenses, investment interest, and for casualty, theft, or gambling losses are exempt from the phaseout.

Customer:

back

Customer:

one second

Lane :

sure

Customer:

ok got it

Customer:

i think i have clarity

Customer:

thanks a lot for your helpful

Customer:

very clear

Lane :

You're very welcome!

Lane :

If this has helped, I would appreciate a feedback rating of 3 (OK) or better (excellent, is ideal)… That's the only I get credit for the work.


However, if you need more on this, please come back here, so you won't be charged for another question.

Customer:

will give you an excellent!

Lane :

Thanks much!

Lane, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 3705
Experience: Providing Financial & Tax advice since 1986
Lane and 4 other Tax Specialists are ready to help you
Expert:  Lane replied 8 months ago.

Thanks for the rating Tom.

Congrats on the new condo!

Let me know if I an help again.

Lane

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