Difference between claiming 1 and 0

[Nicky_v]

Is what's taken out of your taxes when you claim 0, 1, 2, etc based on a percent? For example, I'm in the 22% tax bracket ($41k - $89k). If I claim 0, does a certain percent get taken out of my paycheck? And if I claim 1, does a different, smaller percent get taken out? 

My intent is to calculate how much more I will see after taxes per paycheck depending on what I claim on my w4. 

[Michele_H]

Hi @Nicky_v , You are correct in your assumption of percentages, however they have changed the W-4 to help taxpayers better understand what to withhold based on yearly income.  I am attaching a link to a calculator that you can plug numbers into and answer questions to help you better determine what you may want to withhold.

https://turbotax.intuit.com/tax-tools/calculators/w4/

https://turbotax.intuit.com/tax-tools/

I hope these help!

[Nicky_v]

Thank you for this information! 

However, it doesn't look like I can figure out the percentages before I start my job. For instance, I'm about to start a job, I know what my salary is, but I want to know how much would be taken out if I claimed 1 versus 0. Everything I clicked on looked like it wanted information from a pay stub I don't have yet. 

[LisaS]

Hi Nicky-

The W4 has really changed so you really don't claim "0 or 1" anymore.  The new way your withholding is calculated is to take each paycheck and multiply it to make it annual pay.  Then they figure the tax on the annual pay (less standard deduction and based on your filing status) and then they divide the annual tax back down to a per paycheck amount.  The dependents comes down if they also account for potential child tax credits on what you owe.

If you are starting a job mid-year and already had income that can also skew what you are looking for.

[Nicky_v]

wow interesting! I guess it's been a while since I've started a new job haha. So it sounds like there isn't a way to have more or less taxes taken out of a paycheck. What will be will be? lol

thanks for your help! 

[Rangers44]

Hi Nicky_v

I understand your concern.

As the previous expert stated, the IRS no longer uses personal exemptions like 0, 1, 2 or greater.

To possibly make it simpler to understand and without knowing your pesonal situation, let's assume you are SINGLE and will not be ITEMIZING DEDUCTIONS for 2022.

At a minimum and I do mean minimum, your employer is going to look at your annual salary that is put into a payroll tax program and immeditaely deduct the 2022 Standard Deduction of $12950 from that amount.

For each tier of income above the $12,950, the program automatically compute income tax on the following levels of income:

10% - $0 to $9950

12% - $9950 to $40525

22% - $40526 to $86375

24% - $86376 to $164925

32% - $164926 to $209425

35% - $209426 to $523600

37% - Over $523600

The one thing you are not mentioning is whether you be contributing funds to the following:

401K

Medical, Dential, Vision

Cafeteria Plans

Insurance Policies

While not complete, the sum total of all those type of deductions will reduce the amount of federal or state income tax withheld.

For the most part, your salary will be divided over the payroll timeline of weekly, bi-weekly or monthly.

I hope more details are helpful.

[LisaS]

A few things can change how much you have taken out.

1. you still can ask for a flat extra amount to be taken - that line didn't go away

2. don't claim any "extra" deductions (this would be in place of the standard deduction)

3. "claim" extra income - there is a new section around "other" income to help out people who have income that they don't withhold taxes on (like interest or stock gains).  You can put money here and when they do the calculation for your tax they will "add" this to your annual income.

[jacobthedrummer]

I hate that every explanation I can find describes how to manipulate the system. I just want to know the definition of allowances, so I can answer the exact number correctly. Every explanation I find online seems to explain how large taxes leads to a bigger return and vice versa. It's like asking a math question and getting a lecture on creativity. Drives me nuts. 

[CatinaT1]

As part of the Tax Cuts and Jobs Act, the IRS and Treasury adjusted the tax withholding tables, which affects the amount of income taxes withheld from your pay. In 2020, W4's were completely redesigned.  Exemptions or Allowances are no longer applicable. 

My suggestion is to use the IRS Tax Withholding Estimator here.