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How many exemptions to claim

Hello, my first question is:

We file jointly taxes, children do their own income, no longer dependents. I used to claim 2 but last year we had to pay a good amount back to IRS so, should we claim zero now or that number could be different if we use the calculator?

Second question: is there a new form now to make changes? If so, would that form make it easier for me to determine what I should claim or the calculator is still the best bet. Thank you!

 

1 Best answer

Accepted Solutions
FrankU20
Employee Tax Expert

How many exemptions to claim

The Tax Cuts and Jobs Act (TCJA) became law in late 2017 and significantly changed how the federal income tax system works. The TCJA made several changes, including

  • removing personal exemptions
  • increasing the standard deduction
  • making the child tax credit available to more people

However, the new tax changes don't always work well with the previous version of Form W-4.

  • The older version relied on calculating a number of allowances that were then used, along with any additional withholding amount desired, to figure out how much federal income tax to withhold from your paycheck.
  • The allowance system was tied to the use of exemptions and deductions on your tax return.

When these exemptions deductions were removed in the Tax Cuts and Jobs Act, the Form W-4 no longer estimated the correct amount that needed to be withheld from paychecks as well as it used to.

The first step the IRS implemented was to change the withholding tables. Employers use these tables along with the information on your Form W-4 to calculate federal income tax withholding.

Thus, you can no longer claim "zero" exemptions as that does not exist anymore. That is why the W-4 calculator is such a great tool.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

2 Replies
FrankU20
Employee Tax Expert

How many exemptions to claim

The Tax Cuts and Jobs Act (TCJA) became law in late 2017 and significantly changed how the federal income tax system works. The TCJA made several changes, including

  • removing personal exemptions
  • increasing the standard deduction
  • making the child tax credit available to more people

However, the new tax changes don't always work well with the previous version of Form W-4.

  • The older version relied on calculating a number of allowances that were then used, along with any additional withholding amount desired, to figure out how much federal income tax to withhold from your paycheck.
  • The allowance system was tied to the use of exemptions and deductions on your tax return.

When these exemptions deductions were removed in the Tax Cuts and Jobs Act, the Form W-4 no longer estimated the correct amount that needed to be withheld from paychecks as well as it used to.

The first step the IRS implemented was to change the withholding tables. Employers use these tables along with the information on your Form W-4 to calculate federal income tax withholding.

Thus, you can no longer claim "zero" exemptions as that does not exist anymore. That is why the W-4 calculator is such a great tool.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
tbrown25
Employee Tax Expert

How many exemptions to claim

Hi,

 

To best determine how many exemptions you should claim, your best resource would be to use this W-4 Calculator  to ensure enough taxes are being withheld from your paychecks. 

 

You can use our tax refund estimator to find out how much you'll get back this year (or how much you’ll owe) TaxCaster Tax Calculator   if your outcome is taxes owed, you can calculate additional withholding on your W-4 form on line 4c.  You can update your W-4 form any time during the year.

Hope this helps!

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