Author Topic: Taxes? Exemption Questions  (Read 2904 times)

Feege

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Taxes? Exemption Questions
« on: September 12, 2014, 10:16:05 AM »
Hello!

I was just reviewing my pay stub for this pay period at school (I'm a music teacher) and noticed that, out of the $2,900 base, I receive only $1,800.  A large portion of it was taken out for FIT, SIT and TRS (Teacher's Retirement Services).  I am wondering if I need to review my W-2 and make sure that my exemptions are correct.

I am single, in graduate school (part time), a homeowner (with a mortgage) and work another part time job at a bakery during the summer and on the odd weekends.  How many exemptions should I be claiming?

Joel

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Re: Taxes? Exemption Questions
« Reply #1 on: September 12, 2014, 10:22:50 AM »
Has your situation changed significantly from last year? Did you get a large refund last year?

Feege

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Re: Taxes? Exemption Questions
« Reply #2 on: September 12, 2014, 10:36:50 AM »
I was bumped from .6 FTE to .9 FTE which resulted in a $10,000/year base raise.  I don't remember my return being significant last year, but I don't think I had to pay in.

Joel

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Re: Taxes? Exemption Questions
« Reply #3 on: September 12, 2014, 11:30:54 AM »
What are you claiming? It's probably safe if you have just one job and claim single 1 exemption. Since you are not familiar with calculating what you should be withholding, I would be conservative.

Seņora Savings

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Re: Taxes? Exemption Questions
« Reply #4 on: September 12, 2014, 11:58:14 AM »
I second being conservative if you're not going to look up exact numbers for your deductions.

Your numbers don't seem odd to me.  TRS can be huge, you're basically buying an annuity.

MDM

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Re: Taxes? Exemption Questions
« Reply #5 on: September 12, 2014, 01:47:45 PM »
I am wondering if I need to review my W-2 and make sure that my exemptions are correct.
...
How many exemptions should I be claiming?
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I don't remember my return being significant last year, but I don't think I had to pay in.
Feege, welcome to the forums.

Reading between the lines of your posts, it appears some financial self-study would benefit you.  Fortunately, given your already-busy life, it shouldn't take much time and the benefits should make it worthwhile.  Some steps you could take:
1.  Get a previous tax return that you trust is correct.
2.  Get some tax preparation software.  See http://taxes.about.com/od/taxsoftware/tp/taxsoftware.htm for several suggestions.  If you have Excel 2010 or later, https://sites.google.com/site/excel1040/ is one good choice; TaxAct, TurboTax, etc. are also good programs.
3.  Use the tax prep software to reproduce the return you have from step #1.  Note: if you used a program to do those taxes, then you have already done steps 1, 2, and 3.
4.  Take your best guess at 2014 numbers, put them into the tax prep software, and predict your 2014 taxes.  If the software is for 2013 instead of 2014, that should be ok for your purpose here.
5.  Compare your estimated tax due with the amount already withheld, calculate the difference to determine the amount you need to withhold for the rest of 2014, and adjust your W-4 exemptions to get that amount withheld.  See http://www.halfpricesoft.com/federal_income_tax_2014.asp (Table 4) for one list of the withholding tables.  E.g., if you are paid monthly, one exemption is worth $3950/12 = $329.2.  Subtract any pre-tax deductions and $329.2 * NumberOfExemptionsYour from $2900 to get taxable income, and your employer should withhold $75.60 plus 15% of the taxable income over $944.00.

Or you could go to http://www.irs.gov/Individuals/IRS-Withholding-Calculator and use that, which takes you through all the steps above.

Good luck!