How Do I Stop Getting A Big Tax Return?
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- Опубликовано: 6 сен 2024
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I’m no tax expert; however, I believe Dave is using the wrong term. On your W-4 with your employer, you claim “allowances.” On your actual tax return with the IRS, you claim “dependents.” Your W-4 allowances do not reduce your tax liability. They simply allow you to adjust your tax withholding. (Only mentioning this because there seems to be some confusion when he’s using the term “dependents” as you cannot claim more dependents than what you actually have. Yes, I am getting technical because this was a technical question and words matter.)
Reductions*
Listen to Dave. All will be well. I did exactly what he said and went to my payroll dept at work and asked them to withhold a specific amount because the exemptions amount was bogus.
The IRS actually has a calculator on their website and you give them all your info like earnings, mortgage, bills, debt and so forth. It will reccomend you an option to get you close to no return.
Yep.
But either way, if you pay more throughout the year you will always get what you overpaid back, right? At least that's how I've seen it. I have always claimed zero, and at the moment I don't really *need* that extra money on a monthly basis. When taxes come by it's sort of just extra.
@@AbrahamsYTC yes, but you could be using that money to invest instead of lending it to the govt without any interest. You're just basically lending the govt free money.
@@kidcivic2002 yeah after posting this, this is what I was guessing one of the reasons to do what Ramsey says. Guess im only doing myself a disservice for not looking into it. Thanks
Close to no refund.
I was just thinking about this today while I was at work! You know how to read minds, Dave! I swear it!
U weird
Do your taxes in advance on one excel (most taxes are quite simple). Just use 2020 brackets and deductions and credits.
Next tab over take all your first couple paychecks (if MFJ) in January and extrapolate out where you will end up after 26 checks in terms of cash paid. If you are going to over pay increase your number of exemptions each paycheck until you get close.
Or you can look up the actual table and formula they use to determine the withholding. It’s an IRS publication
My husband and I have been claiming 0 and single forever.... now I found Dave and realized our money was just set aside until income tax time.... we thought of it as a big bonus... it's not, it was our money the whole time!! Already changed my info in payroll to married and 4 exemptions..... we will see how it goes!!
Update on how that went??
@@yourmomsdaddy1699 has went fine. Not as big as a return which was expected. Haven't adjusted it since because now I can't figure out how to, they've updated everything.
@@sarahpollick269 cool. What do you prefer? Big return or less? I’m leaning more into the less. It’s my money and I need it now mentality.
@@yourmomsdaddy1699 With my budget and goals, I prefer to have it throughout the year!!
Need an updated version of this for the new 2020 W-4
Following...
It's on his website i believe
@@kornygerm link?
Dave it is exemptions not dependents.
What’s the difference between claiming dependents and claiming exemption if I’m trying to break even and I have no kids?
A pet peeve of mine is people who refer to their refund a "return". The return is the form you file.
Yes! My other pet peeve is "safety deposit box." It's SAFE deposit box.
But when they refund you... Aren't they RETURNING your money? 🤔
I claim what the W-4 describes to claim. 7 all totaled with my specific family details. That still leaves about $600 refund, which is a comfortable cushion to not end up under-paying the IRS if something changes mid-year, but not so much overpaid that it actually matters.
Colin I’m married with no kids and I get $4,000. This is by following the form.
Jazzymine How do you do this ? :)
Theft Returns... fixed it.
The new w4 is now longer and more difficult to complete.
Could someone explain this to me like I’m 5. Why would you not want a refund? Is it because since it’s getting taxed, the amount that you’re getting back is less than you can have made?
Cole Gonyea a refund pretty much just means that you overpaid in taxes. So, on the contrary, if you owe taxes at the end of the year, it is because you did not pay enough taxes. Hopefully this helps!
Ricardo Gutierrez
Indeed.
Because you just gave Uncle Sam a interest free loan for him to use YOUR money all year long the way he sees fit on your back all while you didn't have access to YOUR money while he was using it.
All you people are fascists. Don't you want the government to have that money to "help" people who aren't as "lucky" as you?
memphis rusty The government helps itself and few others. You must still be in college throwing around the word fascist like that
I claimed 9 one year. I didn’t get penalized and I cut a check to the IRS bc I wanted all my money! It was nice to have that extra monies.
Matt Enderle How did you claim 9 and where you asked for proof? Also, what was your income ?
La_Liz you can claim up to 9 or exempt if you really wanted to. It just means they’ll hold out a majority of the taxes or none at all. My income at the time was $50K.
Matt Enderle thank you so much! 🙏🏽
That will catch up to you in about 10 years
@@mitchelljermaine no. I just owed every year…
Learn from new zealands tax system, tax codes that withhold the right amount automatically.... cut down on forms and simplify the dependants versus working for families....
Tax 'return' is what you file. Tax refund is getting your excess payments back to you.
I still need to get better at this, myself. I paid $381 one year, then paid $87 the next year (getting closer to zero...) and then got a refund for $1202 the next year lol. I need to adjust my math a bit better.
mle011 how did you do this ?
Why not get a refund? You can put it towards emergency fund or bills?
Because it's essentially an interest-free loan to the government.
Cause u can have that money every pay period instead of once a year
Some see the refund as an extra paycheck. It isn’t. It’s money that you overpaid to the govt. and should have had it regardless
@@acruzro95 well if your following the budget philosophy that won't happen...if u can't manage your check then u will go by a tv or down payment for a car with the big check in the spring...I'm not giving the government free money and I can follow a budget me and my wife set
Theoretically, all of you reading this, are using and living on a budget. Better to have all your money thru the year, rather than a "windfall" once a year.
Keep on claiming everything you possibly can and let them come to do all the working out for you.
Pure knowledge right here folks
Just play with the # of dependents each year until it gets to the number you're comfortable with.
That's what I've been doing. I was claiming for the longest time but working an entry-level job. I've claimed one for the past 5 years and only get a refund because of the interest I'm paying on my federal student loans. I also change my exemptions to 2 at the end of the year when there's a lot of overtime to be worked due to the holidays and my coworkers take time off.
rather than paying more taxes during the year, would putting more into 401k be enough by lowering agi?
For me it's a good savings acct. Otherwise I'll spend it on little things every month.
A good savings account would actually gain interest. I encourage all of my friends and family to invest or save that extra money throughout the year and reap the benefits.
Same here. I will absolutely find a way to spend it. I look forward to $5-7k back each January on top of my employers year-end bonus.
@@FinancePro203 You say you would spend it if you didn't give it to the IRS to hold for you. What do you do with it when you get it? Save it or spend it?
@06xtor, same here, we take it and put in savings to pay our property taxes.
@@FinancePro203
I will hold your money for you and promise to give it back on tax day. I will put it in my high yield savings account and keep the interest. You loose absolutely nothing and i get keep the interest. Hey maybe this could be a side hustle for me!!
Honestly its good for a lot of ppl cuz it forces them to save
If they take 1400 a month thts too much I need help.
*fill out w-4, increase exemptions* 💪🌚
Im gonna look into that.
W4 will be changing in 2020. So if you looking change something going into 2020 do not use the 2019 w4~sign your neighborhood payroll specialist.
@@LilMermaid28 how can we increase the exemptions on this new w4???
It’s good to get a refund because it’s like a little savings account that you can use at the beginning of the year. You don’t get interest, but you don’t get charge a maintenance fee. It’s a win-win
Will I need to provide any proof of these dependents ??? I’m on payroll and single making decent money. I’m California so I get the life taxed out of me. I can claim dependents and not provide proof as long as I’m not claiming so many that I’m paying less taxes right?? Can someone please explain???
Isn’t putting you have a dependent on your W4 if you don’t have a dependent fraud ?
My friend was getting 6-8k tax refunds each year... and I was like... why so much?
Im tht friend lol, definitely changing tht in 2020.....
Kids probably
Jo Johns
I bet that 6-8k looks good right now.
Love your channel Dave and all the insight you have! Inspired me to start one of my own!
Most people have an effective 0% or negative tax rate, so a refund is the only way to get that money
Can you still do this?? Claim dependents you don’t have?
Summary for "How Do I Stop Getting A Big Tax Return?"
The best way to figure out how much should be withheld from your paycheck to avoid a tax refund is to prepare a fake tax return for the year, letting it tell you exactly what you would owe in taxes and then dividing that by the number of months. If nothing major changed from the previous year, you can take your refund and divide it by 12 to get the accurate amount to lower your withholding by, but this may not be accurate if there were changes. The number of dependents isn't a reliable factor in this calculation as the IRS tables are not accurate. It's important to ensure the amount withheld from your paycheck matches your tax bill, to avoid penalties.
I'd really love to do this but my current job is new, i've only been at it for 3 months, the hours i got would vary from 18 to 20 hours a week. Now for a month and a half now i've been allowed to work 1 extra hour of over time each day. I don't know how long i'll be allowed to do that for. I don't know if when doing the w4 should I file adding the 1 hour or?....any suggestions?
Would this be the same for those that use ITN ?
Greetings Dave and any tax pros out there. I am an expat for 2.5 years now and I want to change my withholding to get me as close to breaking even as possible at the of year. How do I apply the FEIE Foreign earned income exclusion on my W4?
How do you take dependents of your taxes?
We have zero and zero on our form and we still owe money every year
How??
Your income must be very high for that to usually happen. That's my understanding.
@@AdaEstherGJ not very high, way less than you would think . but yeah we dotn have enough coming out
Do you two make roughly equal? And is your filing status correct on both forms? Also do you have a lot of 1099 income?
On your W2 you can enter additional $ amount to withhold per paycheck to get you back into (slight) refund territory
That makes no sense unless you have 1099 or you don’t know how to do your taxes, it’s simple if your write offs are more than $24,000 then itemize your deductions, else take the standard
anyone know the formula for 2020?
Is this only for certain tax brackets or is this for everyone no matter your situation?
Everyone no matter your situation. If you give them that money they just give it back. So think about what that means, it means the money is just sitting there and not compounding any interest for you so it's not growing. Or you can even say they take it, they invest it and they gain interest off of it, then they give yours back with no growth.
In other words imagine if something costs five dollars and you give them a $20 and they give you $5 back you didn't make any money. But let's say you gave them the $20 and came back a year later and they compounded interest on that $5 at 4.5% (random number). That would be about $0.23 cents a day. Multiply that by 30 days (a month) and you get $6.90. Multiply that by 12 months and you get $82.80. Then you return in April next year and they give you that $5 back. How well did that turn out for you compared to them?
Not related to video but What’s a good amount to have saved at 22? I never like to compare my finances but I would truly like to know
IGriff TV if you have anything saved and aren't in debt you're ahead of 90% of other people your age.
I'd say a really good amount to have saved at 22 would be 20k though.
It totally depends on what you did from age 19-22. (IE: were you working full-time? Were you going to a 4-year university full-time and working part-time, while paying tuition/fees? etc). If you were working full time for 4 years, you should have a good chuck saved. If you just graduated and are starting out your career, it would be less at this point, likely.
Please explain to me like I’m 5. Lol how do I lower my withholding? I have one dependent and am head of household.
Irs = extortionists
Should all be in prison
If you follow this advice you are committing perjury per the IRS and the instruction on the W-4 form. Sometimes it's ok to say I don't know.
Dang so every year i get 10k back and you telling me they take $833 a month out of my check smh
Isn’t it wrongful to claim false amount of dependence?
The more allowances, the less $ they take per pay period. You do not have to verify that # to anyone.
Edit: proper term used
@@smartcookie3500 Abusing the honour system!
@@BBC600 If you claim more, they take less, as long as you can pay back what you owe. Ive claimed exempt, I've claimed single and zero. Owed 5k the exempt year, received 8k when single and zero. There is no honor in the gov't.
I’m no tax expert; however, I believe Dave is using the wrong term. On your W-4 with your employer, you claim “allowances.” On your actual tax return with the IRS, you claim “dependents.” Your W-4 allowances do not reduce your tax liability. They simply allow you to adjust your tax withholding.
@@artbigotti2640 Yes! This. Thank you for clarifying this. Allowances, not dependents. Claiming more dependents would indeed be deceptive and you do have to prove it to the IRS. Once again- thank you Art. 😃 👍.
Hey Dave, what's Cede & Co.?
How do get to call this dude Dave all I get is voice mail
tax REFUND, not return.
The question is why would you ever want to do this?!?
Wait how did your daughter claim 6 dependents and not even have 1?
Dave you are a genius
Yes if you’re single claim 2 that’s how you get to no tax return ..that’s what I do ..no it’s not exact but it was within $200
Krassimir Petrov
I prefer single zero and increase withholding for $4k-$6k refund.
BlackWorldTraveler How much do you pay to the gov?
BlackWorldTraveler why would you want to do that? Wouldn't you want that extra money given to you each month so you can invest that and make interest off of it like the government does?? At least when you do it that way you're allowed to keep your money and the interest you've made off of it...
I’m not looking forward to taxes next year. Me and the wife combined made about 200k this year. I’m going to look for every possible write off lol
wmcfly22 we make around the same but haven’t filed together yet (engaged both make around 100k). I think after 401k, HSA, donations, etc your tax bracket wouldn’t be THAT much.
Emily Browning I hope so. I’ve heard horror stories people owing 10k plus.
What is a write off ?
Lizz Hernandez things that you can claim like giving to charity or donating to goodwill or paying tithes and offerings at your church. Like for me in nursing field, I buy scrubs and shoes for work, I can write that off on my taxes because it's something I need for my job. Hope this helps
When you owe taxes at the end of the year you will be glad you didn’t claim 3-5! You still owe Uncle Sam taxes unless you’re making chump change! Claiming 1 for peace of mind!
john brown math beats peace of mind. With a little planning I have always hit 250 +\- 100 refund.
3of11
I did the math with a little planning to always hit $4k- $6k refund.
Who cares? Stop giving the gov an interest free loan...
how does he expect us to know how to do a fake tax return? why do they make it so confusing?
Ohhhhh. Fake tax return
IRSK
I like how they push a Tom Steyer ad at the beginning of the vid. 😆
so on my withholding I can say like six people even though it's just me one and so when I do my taxes I get a bigger refund?
7LilTish9 no. You're not claiming 6 dependents on your actual tax return because that'd be fraud. You're claiming 6 dependents for your withholding so you pay less every month for your taxes so you don't end up overpaying the government.
A tax refund is money you loaned the government interest free.
I’m no tax expert; however, I believe Dave is using the wrong term. On your W-4 with your employer, you claim “allowances.” On your actual tax return with the IRS, you claim “dependents.” Your W-4 allowances do not reduce your tax liability. They simply allow you to adjust your tax withholding.
@@mattpalmq okay so then if I just say zero then I'll get a bigger refund
7LilTish9 yes but you'll also pay more every check in taxes.
This has got to be all bogus information. My wife and I both claimed zero withholdings for all of 2021. We still owe $600 at the end of the year. If we had both claimed one on our exemptions we would have an unpayable tax bill now. This must only be for the rich people that don't pay taxes
I would rather get a huge tax return then to rouse the government’s attention and end up being audited and owing money.
A lot of you libertarians want to talk about the fact that we are basically giving the government a interest free loan.
Atlee I would rather do that then to end up owing. My tax return this year should be around $20,000.
$7000 of that is going to pay for my summer vacation in Singapore and the Philippines during the month of July and August. I don’t want to end up owing the state or the government anything and I would rather they just withhold more money
how much do you make a year with a 20k return? make 100k a year? you take home 80k? , im 20 in college.
There are penalties with too big of a refund. The only way you can get 20k if if you live in a SALT state.
Well we are giving them an interest free loan...soo..
@@SkepticalVex Not even close. I claim zero, make about $150k+, and only get about $6-7k refunds.
Claiming 11 with a stay at home mom and two kids will net me a 50 dollar return. Don't be afraid of the IRS calculator
I claim 15 lol
What???
Isn't 9 the max?
Not the way I read the worksheet....from my math should be dead on will update in late Feb
Claim Zero
Is it just me or is he literally not saying anything, like he cant even put together one coherent explanation of doing the math.
If I got a 10k return.