How to Calculate Tax Personal Exemptions

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You are allowed a personal exemption for your taxes. This means that each year, a certain amount that is adjusted for inflation will reduce the amount of income that is subject to tax. Personal exemptions depend on a variety of factors, such as tax filing status and whether you have dependents. In 2010 the personal exemption was $3,650 and the standard deduction was $5,700 for a single taxpayer, $8,400 for head of household and $11,400 for married taxpayers.

Obtain a copy of the current Form W-4 either from the Internal Revenue website (see Resources) or your employer. Tax forms are also found at Post Offices during tax season.

Enter the information requested in the personal allowances worksheet. You must indicate if no one can claim you as a dependent, if you are single or married, whether you have a second job, the number of your dependents, or if you are a head of household.

Calculate the amount you spend on child or dependent care expenses that you will use in claiming a credit when you file your taxes.

Complete the deductions and adjustment worksheet or two-earners/multiple jobs worksheet (see Resources) if necessary.

Fill out Form W-4, Employee’s Withholding Allowance Certificate, and return it to your employer.

Tip

Once you have submitted your Form W-4 to your employer, use IRS Publication 919, How Do I Adjust My Tax Withholding?, to see if the withholding amount in your paycheck is enough to cover your projected tax for the year. You should multiply the withholding amount by the number of paychecks you receive each year.

If you want to ensure that you will most likely get a tax refund and not have to pay additional money to cover your taxes, you can enter less exemptions on your W-4, so that your employer will take more out in taxes than may be necessary.

References

About the Author

Kay Lee began freelance writing for Answerbag and eHow in 2010. She is an attorney in Washington, DC, practicing since 2006. Lee specializes in employee benefits and executive compensation. She holds a Juris Doctor from the Columbus School of Law and a Master of Laws from Georgetown University Law Center.

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