I’m not married and have no children. I have been on the job for 6 weeks, claiming ZERO allowances, and I have already paid 33% in taxes, which I believe is far too high. Maybe I’m just naive because this is my first “real job”. I am considering increasing my allowance to one. Is it a good idea? I could rather have less taken out monthly and receive a smaller refund check than a large lump payment. For example, on my 2020 tax return, I received $1,200 back while claiming ZERO. I don’t want to owe anything, but altering it to 1 should not result in that, right?
The right setting to exempt $12,000 from federal income tax is Single, 2 Allowances for a single individual with a single W-2 employment and no other sources of income.
Given that the year is halfway through, you would probably be better off with three or four allowances.
The precise setting instructions can be found on the internet withholding calculator.
Return to being single in January; this means you will only be receiving money from one W-2 employment.
Given that income tax applies more quickly in some jurisdictions, you might choose to enter two less allowances on your state form.
Adjusting your tax allowances can indeed affect the amount of tax withheld from your paycheck. If you increase your allowances from zero to one, it generally means less tax will be withheld from your income, which could result in a smaller refund or potentially owing a small amount when you file your taxes.
Since you mentioned that you don’t want to owe anything, you should find a balance that works for you. Claiming one allowance seems like a reasonable choice if you’re single and have no dependents.
Remember, the goal is to have your withholding closely match your actual tax liability to avoid having too much or too little tax withheld throughout the year. Adjusting your W-4 is a personal decision, and it’s wise to consider your financial situation and preferences regarding your paycheck and potential tax refund.