what is the significance of Number of Allowances on a W-4 Employee's Withholding Allowance Certificate?
Hello and Good Afternoon Everyone,
I am wondering what is the significance of Number of Allowances on a W-4 Employee's Withholding Allowance Certificate. My value for this category is 1. When I compare my return to what others with the Number of Allowances set at 0, their returns are almost twice of what I normally get each year. That said, are there any hidden short-term or long-term benefits of leaving the Number of Allowances set at 1 or should I consider going to Human Resources and having it changed to 0 in order to claim a higher refund next year?
Any shared thoughts to this question will be greatly appreciated.
Thank you
George
I am wondering what is the significance of Number of Allowances on a W-4 Employee's Withholding Allowance Certificate. My value for this category is 1. When I compare my return to what others with the Number of Allowances set at 0, their returns are almost twice of what I normally get each year. That said, are there any hidden short-term or long-term benefits of leaving the Number of Allowances set at 1 or should I consider going to Human Resources and having it changed to 0 in order to claim a higher refund next year?
Any shared thoughts to this question will be greatly appreciated.
Thank you
George
SOLUTION
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Claim less to enforce forced saving with 0 interest and 0 gain on your money
Claim what is appropriate and discipline yourself to save the money yourself and reap the gains.
Claim what is appropriate and discipline yourself to save the money yourself and reap the gains.
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ASKER
I want to sincerely thank everyone for your well-thought-out answers to my question. I especially appreciate the hypothetical scenarios provided by Martin and Nick which were instrumental in enhancing my understanding of the significance of Number of Allowances on a W-4 Form. Generally speaking, I tend to understand ideas and concepts better if I can gain a picture or visual of them.
Thanks again for the great feedback. As always, it is greatly appreciated :-)
George
Thanks again for the great feedback. As always, it is greatly appreciated :-)
George
Thanks.
0 gets you a bigger refund ..... if that might be your desire.
0 gets you a bigger refund ..... if that might be your desire.
If you know what you have to pay in total, pick the Allowance accordingly.
Most people will pay now (short term pain) to ensure a refund in April and not tax owing in April on top of their payroll taxes.