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Hi I just bought a condo and want to make sure I am filling

out my revised W-4 correctly...
Hi I just bought a condo and want to make sure I am filling out my revised W-4 correctly
Ask Your Own Tax Question
Answered in 5 minutes by:
11/12/2013
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12,878
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified

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
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12,878
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified
Lane and 87 other Tax Specialists are ready to help you
Ask your own question now

Thanks for the rating Tom.

Congrats on the new condo!

Let me know if I an help again.

Lane
Ask Your Own Tax Question
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Lane
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12,878
12,878 Satisfied Customers
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986

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