I’ve posted before about manipulating Jay’s withholdings. This is something I’ll be doing again once I have our return done. As far as the kids are concerned, though, last year was the first year I remembered to have them declare themselves as exempt. None of them ever made enough to have to pay taxes, yet I was always filing returns for them as they had withholdings to be refunded. This year, it looks like none of them have to file (but I’m checking, just to be sure).
Next year, we won’t be able to claim Steve as a dependent. Plus, he’ll be making more than $9,750 – so he’ll have to pay taxes and doesn’t want to declare himself exempt. He doesn’t want a big surprise at tax time and find that he owes anything substantial!
We went through his W-4 and had him claim three allowances. He had a little trouble grasping the whole process, as it is basically a forecasting exercise and we don’t have a crystal ball as to how much he’ll be making in ’13. He’s a ski instructor right now. But the season ends in the spring and then who knows what he’ll find or how much he’ll make. I told him we could rerun the calculations later in the year, based on what he’s earned so far, and had withheld so far, etc. I’m sure I’ll have to walk him (and the others) through the process a number of times before it sinks in.
And I’ll be happy to help with their returns for as long as they need, until they’re confident enough to do it themselves.
It’s important to be tax savvy!