Tax question for young single dude

[LP-Roadster]

What's up guys? I have a question regarding exemptions/dependents.

I'm 22 years old, make $38k salary not including bonus potential. That's around let's just say $3k for now.  I usually just claim myself on my taxes, and every year get a refund of some sort. I am upping 401k contributions to 10% for 2018, probably contribute 1k/year to HSA, fully fund my Roth IRA, and of course deduct student loan interest. I would have to look through Great Lakes to find out how much that will be for 2017.

I read a quote recently that basically said if you receive a tax refund, it's poor planning through the year as far as maximizing my paydays.  So I'm curious as to how, based on these numbers, I can do just that--maximize paydays and not give a free loan to Uncle Sam through the year. I'm looking to stay as close to 0 as possible.

If I've left out anything else that's needed, please let me know! Thank you in advance!

[seattlecyclone]

The way to reduce your withholding is to file a new W-4 with your employer with a higher number of allowances than before.

[LP-Roadster]

Yes I am aware, however, I was wondering if there is a specific number of allowances I should be claiming based on my numbers. I know the process, just not the numbers to get me there.

[seattlecyclone]

The instructions on the form should be pretty good for a single worker with a steady rate of pay and not a lot of non-standard deductions.

How much of a refund do you tend to get?

You could use a paycheck calculator to see how much of an effect adding 1 exemption (or 2, or whatever) would have on your withholding.

[thesis]

Somebody with more knowledge may be able to weigh-in on this, but you are right at the very edge of your tax bracket, so if there is any way you can contribute to a 401k, traditional IRA, or other pre-tax deduction in order to reduce your taxable income, it may actually drop you a tax bracket.

I believe this is incremental, meaning you only pay the higher percentage on taxable income that exceeds the limit for the lower tax bracket. Since you are on the very edge, it may not save you much money over all, but that tax increase on additional money is still significant, so save yourself the cost and invest enough to keep yourself inside the lower bracket :) (definitely do some research on this, though, I'm fairly new to it)

[Babybalrog]

As a "YSD" I've found the online calculators for allowances to be pretty poor. My plan has been to increase my allowances by 1 each year until I'm right on target for taxes. Since you mentioned bonuses. You should ask how taxes are withheld for those. At my place of work, when i get a check with a bonus, they withhold a bunch for taxes. They basically treat each check as its own tax even and assume I make 26 times that a year (I get paid fortnightly). Even when it's only one check. Alternatively they could keep a running about. I believe those are the two acceptable withholding schemes approved by the IRS, but I'm no expert. So you may be getting too much withheld and could use the extra allowances.

Additionally, you said you are putting $1k/year into an HSA. I would really recommend maxing that out and keeping track of your medical bills now. HSAs arn't called "The Ultimate Retirement Account" for nothing.
https://www.madfientist.com/ultimate-retirement-account/

Last few years I've gotten around $4k, with 2500 being a credit for school (can't remember the name of it off the top of my head). I was allowed to claim it only my first 4 years of college or something. I won't be receiving it this upcoming tax season.

That sounds like the American Opportunity Credit. It only last 4 years. On your 5th year you need to convert to the Lifetime Learning Credit. Not as good, but usable forever (until they repeal it).

[geo_kale]

Hey! I'd highly recommend printing out the Income Tax 1040 form and filling it in by hand. This helped immensely to understand the math behind taxes. The game has changed a little bit with the new tax plan in place, but your numbers sound pretty straight forward to me.

I've also found this IRS withholding calculator helpful in the past (may need time for updates due to rule changes): https://www.irs.gov/individuals/irs-withholding-calculator

Generally the more you contribute to pre-tax accounts, the less tax you will "owe" in that year, thus the more allowances you'll claim.