Have a Tax Question? Ask a Tax Expert
I have a salary paying job of $45000. My paycheck is bi-weekly. I claimed 0 on my tax form. My taxes (federal, state, medicare) are approximately $500 per paycheck. Should I change my tax status to 1? I also have education loans I can claim this year. Your advice would be greatly appreciated.
To answer your question I am going to make some assumptions (that you are single, under 65, and with no dependents, that you take the standard deduction and that 45000 is your only income), and will give you some figures:
Based on my assumptions (please correct me if there is something different), your 2006 tax liability would be approximately 5383. (I am not figuring your loans in, but at most it might lower your liability by about 635).
If you are paid biweekly, you need to have 207 federal tax withheld each pay period. If you claim single, 0, your bi-weekly pay is about 1731 (gross) with 279 federal withholding. This is about 72 dollars more per pay than you need (to even out at the end of the year, not owing and not getting a refund). You could probably claim 1 or 2 exemptions based on this assessment. 2 exemptions would give you 215 federal withholding, so you would be safe not to owe based on our assumptions.
Whether you should do this is up to you and your preference whether you would like a larger refund or more money in your paycheck during the year. If you stay at single 0, you are slated to get about an 1800 -1900 refund in 2006. Please note that these numbers could be different if you have other income, deductions, or 401k, pre-tax medical insurance that we haven't taken into consideration.