I got got done doing the IRS Withholding Calculator (http://www.irs.gov/individuals/article/0,,id=96196,00.html)
It say i should have 19 ALLOWANCES for the rest of this year!!!!!!!!!
I thought this had to be wrong so I filled it out 3 times to make sure i got the information right, and it was the same result 3 times.
I got back about 00 return for the past 2 years mostly due to mortgage interest. I am scared to input that many allowances but I also don’t like the idea of giving the government an interest free loan i could be investing.
How should I handle this?
It is very possible that you did come out with the proper exemption amount–however, did you include possibly other types of income or, if married, your spouse’s income in the calculation. Also, keep in mind that your employer, by law, needs to forward your W-4 to the IRS because it exceeds the number of exemptions they allow for a taxpayer. The IRS wants to know if you could be not paying your fair share, in your case you probably are. Take care – Good luck – and I hope this helped.
Read form 1040ES. Figure out your "safe harbor" and then go to http://www.paycheckcity.com and see if the 19 allowances works for you.
The IRS doesn’t have a problem with big allowances as long as you really, honest to goodness don’t owe very much at tax time.
Note the withholding calculator may not handle AMT very well.
It is possible if you have a large mortgage. Especially a newer one where almost all of your payment is interest. If your a bit afraid, drop it down to 15 or so. key thing is that you want to get $1,000 a month (for the 8 months left in the year) so it should be easy to check it on your next paycheck. Don’t forget to adjust it down a bit next year as you want to get a bit under 8K but for the entire year.
It is possible that it is correct, monitor your paychecks after you make the change to make sure the total difference in withholding is what you will expect for the year.
Employers do not have to send W4′s to the IRS if they have more 10 or more allowances on them. That rule does not exist any more.