[net.taxes] Increasing deductions because of a mortgage

brahms@spp5.UUCP (Bradley S. Brahms) (02/25/86)

[}{]
At the beginning of this year, my wife and I moved into a new house.  Of
course, the intestest part of the paryments are tax deductible.  Is it
legal to increase the number of deductions on a W-4 so that we won't have
to have a huge tax refund at the end of the year?  I hate given interest
free loans!  If so, how do I go about figuring how many deductions to
take?  Ask our local company employee office?  Thanx.

			-- Brad Brahms
			   usenet: {decvax,ucbvax,ihnp4}!trwrb!trwspp!brahms
			   arpa:   Brahms@usc-eclc

deacon@ihu1g.UUCP (j m deacon) (02/27/86)

> course, the intestest part of the paryments are tax deductible.  Is it
> legal to increase the number of deductions on a W-4 so that we won't have
> to have a huge tax refund at the end of the year?  I hate given interest

As far as I know, you can claim anything you want on your W-4. 
Many people I know claim 0.

-- 
Jim Deacon
ihnp4!ihu1g!deacon

joepwro@ihopa.UUCP (Joe Wroblewski) (02/27/86)

> [}{]
>  Is it
> legal to increase the number of deductions on a W-4 so that we won't have
> to have a huge tax refund at the end of the year? 
> how do I go about figuring how many deductions to take
> 

Definitely,

The W-4 usually comes with a work sheet to help you figure out how
many deductions you should take.  I personally claim 10 deductions
(which was calcualted using the work sheet) and I usually come
very close to paying the right amount (+/- $100).

				Joe P. Wro
				

spock@iham1.UUCP (Ed Weiss) (02/27/86)

In article <104@spp5.UUCP>, brahms@spp5.UUCP (Bradley S. Brahms) writes:
> [}{]
> At the beginning of this year, my wife and I moved into a new house.  Of
> course, the intestest part of the paryments are tax deductible.  Is it
> legal to increase the number of deductions on a W-4 so that we won't have
> to have a huge tax refund at the end of the year?  I hate given interest
> free loans!  If so, how do I go about figuring how many deductions to
> take?  Ask our local company employee office?  Thanx.
> 
> 			-- Brad Brahms
> 			   usenet: {decvax,ucbvax,ihnp4}!trwrb!trwspp!brahms
> 			   arpa:   Brahms@usc-eclc

I believe you easily take up to 15 deductions.  If you want to take
more than that it gets complicated.  (They want PROOF.)

This is what I did:  I managed to acquire a copy of the tables employers
use to compute how much tax is to be withheld.  You should be able to
get a copy of these tables or the formula from your payroll department.
I then figured out how much my taxes would be the next year (given
my approximate salary for the coming year, the amount of interest I
would pay, and assuming the tax rates would be the same).
Then I used the tables to see how many deductions I could take and
still have the correct amount of tax withheld.  I then subtracted 1
from that number of deductions to be safe.

The above worked for me.  You can adjust your deductions during the
year if your calculations are not working out (or one of the variables
changes).  I suggest that you make sure Uncle Sam OWES you some money
at the end of the year.  I believe you are more likely to be audited
if you owe money.

Good luck.
-- 

					Ed Weiss
					ihnp4!iham1!spock

					--> Live Long and Prosper <--

szyld@duke.UUCP (Daniel B. Szyld) (02/28/86)

Regarding increased excemptions to avoid a large refund...

Simply file a new W-4 with your employer. The form has instructions which 
are easy to follow. Essentially you estimate your deductions and the form
gives a formula for the number of exceptions to claim. There is absolutely
no relationship between that and the excemptions to be claimed in your 1040.
The only detail to have in mind is not to own too much, and thus avoid a
penalty. Another warning: After 10 exceptions, there is no difference in the
witholding (I think) AND the IRS flags you in case you are a tax protestor.
-- 

Daniel B. Szyld, Dept.of Computer Science, Duke University, 
Durham NC 27706-2591. Phone (919)684-3048. Telex 802829 DUKTELCOM DURM
CSNET: szyld@duke        UUCP: {ihnp4!decvax}!duke!szyld
ARPA: szyld%duke@csnet-relay  or na.szyld@su-score 

brahms@spp5.UUCP (Bradley S. Brahms) (03/02/86)

[}{]
First, I would like to thank all those that replied to my query.  I have
tried to reply to everyone but may have left a couple off.  Second, my
query was to find out if it was possible/legal to increase the number of
deductions to offset the interest paid on a mortgage.  Well, the answer is
yes.  Evidently on the back of the W-4 is a worksheet that can be used to
calculate the number of deductions to take. 

Again, I wish to thank all those the responded.

			-- Brad Brahms
			   usenet: {decvax,ucbvax,ihnp4}!trwrb!trwspp!brahms
			   arpa:   Brahms@usc-eclc

king@kestrel.ARPA (Dick King) (03/02/86)

   From: szyld@duke.UUCP (Daniel B. Szyld)
   Newsgroups: net.taxes
   Date: 28 Feb 86 14:11:39 GMT
   Reply-To: szyld@duke.UUCP (Daniel B. Szyld)
   Distribution: net

   Regarding increased excemptions to avoid a large refund...

   Simply file a new W-4 with your employer. The form has instructions which 
   are easy to follow. Essentially you estimate your deductions and the form
   gives a formula for the number of exceptions to claim. There is absolutely
   no relationship between that and the excemptions to be claimed in your 1040.
   The only detail to have in mind is not to own too much, and thus avoid a
   penalty. Another warning: After 10 exceptions, there is no difference in the
   witholding (I think) AND the IRS flags you in case you are a tax protestor.
   -- 

   Daniel B. Szyld, Dept.of Computer Science, Duke University, 
   Durham NC 27706-2591. Phone (919)684-3048. Telex 802829 DUKTELCOM DURM
   CSNET: szyld@duke        UUCP: {ihnp4!decvax}!duke!szyld
   ARPA: szyld%duke@csnet-relay  or na.szyld@su-score 

There is no threshold above which the effect of claiming additional
exemptions vanishes (except, of course, when no income is withheld).

Copies of W4 forms claiming more than 14 (not 10) exemptions are sent
to the IRS, but it doesn't seem to do any damage.  They probably WILL
get on your case, however, if you end up owing them substantial money.

You are never in trouble if either 1> you have withheld at least 80%
of your taxes, or 2> you have withheld at least as much as you owed
last year.


-dick

miorelli@pwa-b.UUCP (BoB Miorelli) (03/04/86)

The tables the employers use to figure deductions are in `Circular E'
published by the IRS.  The formulas are quite simple and I will be
willing to post them to the net if there is sufficient interest.

-- 

-->BoB Miorelli, Pratt & Whitney Aircraft
           also, H & R Block tax perparer and Instructor
pwa-b!miorelli