Today TaxMama hears from Bob in Plainfield, IL who tells us, “I am married filing jointly. My wife stays at home with our 3 children. I currently claim 12 allowances on my W-4 and still get money back at tax time. TurboTax recommended I increase my W-4 allowances to 99 and increase my 403(b) contributions X amount and my check will remain the same. I wasn’t sure when I did the worksheet last year and changed my allowances to 12 and now it’s telling me to change it to 99. Is it legal to do this?”
It is legal.
TurboTax is giving you the straight skinny on this.
I know, in the past, it would attract IRS scrutiny since the employer had to send your W-4 to IRS anytime you claimed 10 or more.
They no longer have to. As long as you don’t owe money on April 15th, you won’t have any problems. Or if you do owe money – you pay it by the time you finally file your tax return – even if it’s with an extension.
For more information about that change, read this article I wrote for MarketWatch last December when IRS announced the new policy. IRS tightens rules on paycheck withholding
In fact, print it out for your employer if you get any flak.
Remember to review your withholding and income halfway through the year to make sure you’re still OK.
Remember, you’ll find answers to questions about withholding and all kinds of tax issues, free. Where? Where else? At TaxMama.com[Note: If you were subscribed to the e-mailed TaxQuips, you’d get special tips that aren’t published anywhere else. Please click on the subscribe link and join us.]
- Ask TaxMama :: Where taxes are fun and answers are free
- MarketWatch.com :: IRS tightens rules on paycheck withholding