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Whether you’re an experienced do-it-yourselfer or doing your own taxes for the first time, this is your place to learn and share. Here you’ll find information and resources for using H&R Block’s online and software DIY solutions. You’ll also find links to more information to assist you on your DIY journey.

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Pioneer
Posts: 1
Registered: ‎05-10-2017

Purchase home and W4 question

I have a question on how to complete my W4..My wife and I owed federal taxes last year as both of our status were set to married and 0 allowances. We were told to do 1 allowance and set our status to married but withhold single so we don't owe at the end of the year for federal. This really affected our paychecks and we just purchased a home in January. So did we really need to change our status and allowances since now we are homeowners and can write off property taxes for this year? I would assume that would counter it our previous issues since we had nothing to write off?
Tax Pro
Posts: 5,439
Registered: ‎02-23-2016

Re: Purchase home and W4 question

HI cmac2004,

 

Welcome to the H&R Block community.

 

If you had your W-4 forms filled out with zero exemptions last year and you still owed tax then you need more withholding, not less.  If you change your exemptions to 1 or 2 exemptions you will have less withholdings and you will owe more tax.  Claiming 0 exemptions results in 10% withholding while 1 exemption results in about 8% withholding.  The more exemptions you claim the less withholding you will have and the more tax you will owe.

 

Also, you cannot rely on the Schedule A home-related deductions to reduce your tax because when you're eligible for Schedule A it takes the place of your standard deduction.  So for example, if you have $13,000 in itemized deductions then you're actually only getting a $400 increase in your deduction amount because your standard deduction is $12,600.  Your standard or itemized deduction amount also does not decrease your tax liability dollar for dollar.

 

You may be eligible for some tax credits that can really help you out if you have dependents, but that also depends quite a bit on your income.  Tax credits decrease your tax dollar for dollar.  If you purchased and installed any energy efficient systems or equipment in your house that is also worth a pretty good tax credit.

 

If you would like I'll help you figure out how much withholding you need, but I will need to know each of your and your spouse's incomes in order make the calculations.  You can click on my name and send that information in a private message if you would like rather than posting it here.  From the information you've provided you will need to claim 0 exemptions + extra withholding, but again I'm not saying that with 100% certainty since I don't have your actual income information to go on at the moment.

 

Louis,

Senior Tax Advisor (Tampa, FL)