Change exemptions with a new mortgage?

[Kestas]

Yes, I increased my exemptions when I got a mortgage. I aim for the zero mark (no tax liability, nothing returned).

Since I remortgaged and now pay little interest, I'm in danger of being too short in my withholdings and may have to change my exemption claim.

You could probably estimate how many exemptions will work for you by filling out next year's taxes as best as you can (assuming nothing changes with the tax law and you can reasonably estimate what this year's income and deductibles will be). Iterate using a number of different exemptions until you feel comfortable with what works for you, then refile a W-4 form with the new exemptions with your employer.

You may take into account what's been deducted so far, but it's safest to find what works for the whole year, in case you forget to adjust it for 2007.

All usual caveats apply with my advice. If you want to pursue this further, any professional tax preparer should help you by looking over all the details in your situation.

 

[JHZR2]

Yep, Ill be doing the calculations for sure... I just wasnt sure if this was SOP... or if exemptions were just for spouses, kids and similar.

Thanks,

JMH

 

[Matt_S]

Any time your tax deductions change, you want to re-examine your withholdings.

 

[Schmoe]

Add up your wife plus kids and then add one more.

 

[Pablo]

Do the little IRS calculation thing on the W4(? I always forget W2/W4 forms) form. Schmoe is close but I would say add two or three more.

 

[Papa Bear]

I'll add Schmoe's kid

P.B.

 

[Schmoe]

WHOA there papabear fella!!! Need all the exemptions I can get since this is the last year I'll be able to itemize thanks to refinancing two years ago. I've had to change my taxes and deduct one from it to make up. Luckily here in Oklahoma, our property tax is no where near what your paying. But the way I look at it, they are going to get your money somehow. Pay it now, or pay it later, but your going to pay.

 

[Papa Bear]

Ah, Schmoe, I was jerkin' your chain

You can have my kid as an exemption this year....he's 33 yrs old though and eats like a bear.
P.B.

 

[Gary Allan]

Just calculate your current income from the tables and knock off the average interest/tax composite (adjusted for how you're paid) and see where you fall in "overpayment".

All that I did was see what I got back in one year ..and then adjusted my withholding to that amount. It was $5500 one year ..so I adjusted the exemptions to result in $100/week ...put that into employee stock purchases. Your deductions for the house are not going to go down anytime soon ..as long as your income is stable ..then you don't have to mess with it too often.

I didn't miss much with the extra withholding for one year. The interest in $5500 isn't spit ..and you get taxed for that too. I saw no reason to just wiz it away in my paycheck ..hence the stock purchase.

 

[JHZR2]

Hi all,

I know this isnt a financial advice forum, and that nobody here is at this site to be a financial or tax expert.

I dont have one myself, as I do my taxes by hand. So Im doing research online and figure Id ask here.

If you have a certain number of exemptions on your taxes... and then get a new mortgage (new=never had one before), is it smart/right/ok to increase exemptions by one?

Ive never had to itemize... now, Ill pay $5200/yr in property tax, enough to itemize in and of itself, let alone mortgage interest, charitable giving, etc., etc.

Ill have thousands to itemize this year, probably over $10k...

So when you got your first mortgage, assuming all elese remained the same, did you increase your exemptions?

Thanks,

JMH