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Originally Posted by Stompy
For 2003, I received a check for a few grand... and what I wanted to do was set my dependents high enough so that I didn't get ANYTHING back for 2004. A few grand split across 12 months is a few extra hundred I could use right away instead of waiting a year. I own a house, so I have a lot to write off when it comes to interest/property taxes.
So, the guy I had prepare my taxes suggested I raise my dependents to 2 to kinda balance it all out.
I know NOTHING about taxes, but what I did was briefly went over last year's forms with this year's numbers... and it appears by entering 2 dependents that I'm getting even MORE back. That doesn't seem right...
Now, I'm assuming I did the form wrong, but how does one generally work something like this out? Would setting it to 2 balance it all out?
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You're not calculating the taxes like you've got two dependents, you're calculating the withholdings like you do.
More dependents = less withheld, so you get less back on 4/15.
If you want to pay in the least amount possible, you really only need to pay in 100% of the prior year tax to be "penalty proof." You can then pay in as needed on 4/15 should anything change.
There's an art to this, so check with your accountant.