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Thread: Withholding,exemptions...bla bla...

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    Default Withholding,exemptions...bla bla...

    So Im goin to go over my w4's in a minute when I can get the website up for Victorias Secret company...I think I filled in all 0's in the lil boxes.
    (Im really clueless about this, is my first (excuse me, real job) since Ive had kids. Do I mark 2 for allowances I am claiming..since I have 2 kids? Also their dad is claiming them on taxes this year since I JUST started working and he is Navy and has made more,so we're going to split the refund this year. Next year, of course, Ill claim them...AND keep ALL the refund!!
    Also, these numbers....which one means I will get more with held from my check and more at tax time...or LESS withheld from my check and less at tax time?? Im so confused about this, having kids....I wanna make sure Im doing the right thing.

    Also thinking about setting up some kind of retirement with my bank. Was just told if starting this year, I save $5000...I will have $1.3 million in the bank when Im 65. WOW.

    Im really clueless about a lot of this stuff...so any responses in the idiots guide form would be great! lol
    Thanks guys ....
    Last edited by Xiomara; 01-01-2010 at 07:26 PM. Reason: Is it too late to make w4 changes for this years taxes? Does it matter?

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    Default Re: Withholding,exemptions...bla bla...

    several questions ...

    - I assume from your post that you are actually an 'employee' of Victoria's Secret, such that you receive regular paychecks with taxes withheld ?

    - as a true 'employee', the W4 form is used by the employer to calculate the amount of (estimated) income taxes to be withheld from each of your paychecks. The number of dependents claimed on a W4 form cross-references income tax formulas. Therefore if you will be able to claim yourself plus two additional dependents in 2010, the proper entry is a total of 3 exemptions.

    - filing a new W4 form now, i.e. affecting the first paycheck in 2010, will carry forward throughout all of your 2010 paychecks to your 2010 tax return that eventually will be filed in 2011


    As to setting up a 'gov't sanctioned' retirement fund is ONLY an automatic 'winner' if it is part of an employer's 401k matching contribution plan ... i.e. if a situation exists where an 'employee' contributing 4% of their gross income to an employer managed 401k plan triggers a matching 2% automatic contribution by their employer to the same 401k plan - or the employee's 401k account being credited with a total of 6% that really only 'cost' the employee 4%. Indeed such matching employer contribution 401k plans constitute 'free money'. Such matching plans MAY be available through some employers - however they are NEVER available through a bank.

    Beyond the matching employer contribution 401k plan, there are a host of gov't sanctioned retirement plan types available. However, all of the gov't sanctioned retirement plans actually involve a number of risks ...

    - all of the gov't sanctioned retirement plans impose an early withdrawl penalty if money is withdrawn before reaching age 60 ( with certain 'emergency' exceptions )

    - all of the 'tax free' plans i.e. IRA, 401k etc. really aren't tax free - they DEFER income taxes until the money is withdrawn. As such, putting today's money in these plans involves a calculated risk that today's tax rates will be higher than the future tax rates.

    - all of the 'tax free' plans i.e. IRA, 401k etc. implement the tax deferral by NOT counting contributed money as current year's taxable income. The trade-off of course is that once money is eventually withdrawn, it THEN counts as additional taxable income in that future year. This has other ramifications i.e. withdrawn IRA money 30 years down the road may also render that person ineligible to receive certain gov't retirement benefits / gov't health care benefits etc. where the eligibility is based on future year total income.

    There is a different type of gov't sanctioned retirement plan called a ROTH IRA ... which does not attempt to avoid current year tax liability, but which also does not count toward future years' income when retirement account money is eventually withdrawn. IMHO the ROTH account involves far fewer gov't 'strings attached', thus is far less of a gamble in regard to future gov't rule changes. If you don't have an employer matching contribution 401k account available, and you feel that you want / can afford making contributions to a gov't sanctioned retirement plan, a ROTH account is probably the best compromise.

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    Default Re: Withholding,exemptions...bla bla...

    Quote Originally Posted by Xiomara View Post
    So Im goin to go over my w4's in a minute when I can get the website up for Victorias Secret company...I think I filled in all 0's in the lil boxes.
    (Im really clueless about this, is my first (excuse me, real job) since Ive had kids. Do I mark 2 for allowances I am claiming..since I have 2 kids? Also their dad is claiming them on taxes this year since I JUST started working and he is Navy and has made more,so we're going to split the refund this year.
    While you can claim them on your W4, when it comes to filing your return, you cannot claim your kids. They only get to be dependents once. This year, they are his.

    Next year, of course, Ill claim them...AND keep ALL the refund!!
    Maybe, maybe not. The rule is he or she who provides the most support gets to claim the children as dependents. The presumption is the custodial parent provides more support, but that can be rebutted. Also, look at which way nets the lowest tax. And go that way.

    Also thinking about setting up some kind of retirement with my bank. Was just told if starting this year, I save $5000...I will have $1.3 million in the bank when Im 65. WOW.
    There are two sorts of individual retirement accounts. A traditional IRA which is so called pre-tax dollars and a Roth IRA which is so called after tax dollars. There is an extensive discussion on the merits of both or doing nothing at all. I prefer the Roth IRA, I think it is a sound investment if managed properly. I do not see a radical change in the rules regarding how these things are taxed that some posters do. I also think it's wise to prepare to support yourself in the out years when income will not be as readily available. Stripping is a short career. Put as much money aside while you are peak earning as possible.

    HTH
    Z

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    Default Re: Withholding,exemptions...bla bla...

    To expand a little on they "who gets to claim the kids" thing.

    Are you getting child support for the two kids? If not why not?

    I was in the Navy for 22 years and I know a little about this. It is farily easy for you to get the Navy to pay you whatever amount of child support you are/were awarded, they pay it directley to you in the form of an allotment, he never even sees the money and has no choice in the matter, also he is getting, because of having these two kids an allownace IE "extra money" from the Navy that IF he is not remarried or has any other kids would not otherwise be getting, so you can bet he is "claiming" as far as the Navy goes these two kids.

    These days, this payment is mostly likley direct deposited in your bank acct. I have been out since 01 so I don't know if getting a check in the mail is even an option anymore.

    Assuming you are getting child support if the amount he/they are sending you per year adds up to 51% of your income then he gets to claim them on his taxes for 2010 that would be the return files in April 2011 and every year in the future that that remains the truth, like it or not that is the law.

    Again assuming that you are getting child support and he is paying 51% can you go to court and get the child support order ammended so he pays less to put him at 49%? I don't know, but I am sure the first he would have to agree and if it means he pays only a small amount less lets say $200/month/2400/year but has to give up to exemptions that are worth in the neighborhood of 8 grand I don't see him agreeing to this, also you would have to get a judge to sign off on this new lower amount, THe Navy WILL NOT change the amount they send based soley on some "voluntary agreement" between the two of you, and as I said if it is not in his interest he is not likely to "agree"

    If that judge were to ask why you wanted less money what would you say?

    If he/she gets even a hint that this is "tax scam" for lack of a better term on your part that would NOT be a good thing.

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    Default Re: Withholding,exemptions...bla bla...

    We are going thru the divorce now, but I dont want to enforce child support with a judge. We can decide for ourselves, and all I have asked him for was to pay daycare every 2 weeks which comes out to 380 every two weeks. I dont ask for money for clothes or food or anything. Just daycare. So he set up an allotment for that. The courts would probably make him pay more than that, being that he is in VA single with no other children. But Im cool just with him making sure daycare is covered.
    Also, he's going out to sea for 7 months, so hes sending me a few grand from his refund, and Im cool with that. Can get more than caught up with bills.
    I dont ask much. Im easy to please. Just didnt know the correct way to go about my w-4. Ill claim them this year though, since Ill be employed all year. Yay!

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