How many exemptions should I claim?

What is a W-4 form?

A W-4 form is a document that authorizes your employer to withhold amounts from your salary or pay so that it can be reserved and withheld for the payment of income tax to the Internal Revenue Service.  It is also a form where the taxpayer declares the amount of exemptions, deductions and allowances he is entitled to. It is submitted to the Internal Revenue Service. The IRS suggests that you review the exemptions, deductions and allowances on your W-4 form each year to ensure that you are claiming the right amounts.

What is an exemption?

An exemption is an amount authorized by the IRS to be deducted from your gross pay so as to decrease the amount of income that can be taxed.  An exemption is an amount from the gross income which the IRS allows the taxpayer to reserve from tax. They work to minimize your tax liability by reducing your taxable income.

What kind of exemptions are there?

If you are an individual taxpayer who is single, or married, or divorced, widowed, widower or single head of a family, you are entitled a fixed amount of personal exemption.  For each dependent child, you are also allowed a fixed amount of exemption.  Exemptions are also available to corporations or organizations as corporate taxpayers.  Consult with a New York Tax Attorney to know what exemptions you are entitled to.


What are personal allowances?

Personal allowances are cash amounts that can be deducted from your gross pay to reduce your taxable income and minimize your income tax liability.  If you are paying a mortgage, your mortgage payments are allowed to be deducted from your gross pay. The amount you paid for local state taxes, charitable contributions and medical expenses are also items that are allowed by the IRS to be deducted from your gross pay. To ensure that you are claiming only the right amount for personal allowances, it is best to consult a New York Tax Attorney.

What happens when you claim too many personal allowances?

Your employer uses your W-4 form to compute how much to withhold from your salary to pay for your taxes.  If you claim too few exemptions, the amount withheld by your employer to pay for your income tax will be too big for your actual tax liability and you may be entitled to a tax refund when the IRS reviews your income tax return.

If you claim too may exemptions, deductions and personal allowances, your employer may withhold too little tax from your salary.  At the end of the year, if too little has been withheld by your employer then you will have to pay a bigger amount when you file your consolidated annual income tax return.

To get advice as to how much personal exemptions, deductions and allowances you can claim, it is best to consult a New York Tax Attorney. We at the Maxwell Law Firm, PLLC assist clients with filing tax extensions, tax return preparation, amendments, tax collection defense, tax settlements, and other services. If you need assistance please feel free to call us at 718-701-0095 to discuss your options.