Question: Claiming 2 dependents (me and my husband)?
I’m married. I make more money than my husband, though I only claimed one dependent on my w2 this year – though the worksheet (which I didn’t understand) said I could choose 2, since we both work. We live in SC, and we have no children (2 dogs). I was told that by choosing two though, I run the risk of owing the IRS money in February – because they’ll take out less taxes during the pay weeks. Does anyone have any advise? I’d rather not owe the IRS anything, and make less weekly!
Also, I do itemize my taxes because of my Mary Kay business. I was told that may help me as well – though I don’t know what kind of deductions I’m looking at (I didn’t file it last year)…. I know that was vague… but I would like some hints.
Answer: First of all, on your W-4 worksheet it says you can claim an extra exemption if you are married and your spouse does NOT work, so that doesn’t apply to you, so you did right by claiming one. Whoever told you that if you claim 2 (especially if your spouse claims 1) you risk owing when you file is correct.
Now, the Mark Kay business. You don’t itemize for that. You show the business expenses on a schedule C along with the income. That has nothing to do with itemizing, which is a different process and has to do with personal expenses, not business expenses. You still can deduct the business expenses even if you don’t have enough deductible personal expenses to itemize.
Depending on how much you make on the Mary Kay business, unless it’s very little, you should probably be making quarterly estimated payments for that. (I assume you are saying that you have a job where you are an employee in addition to the Mary Kay). If you aren’t making quarterly payments, you will most likely end up owing at tax time due to the taxes on the Mary Kay income.
The best advice I can give is to see a CPA or enrolled agent (NOT Block, Hewitt or Liberty) as soon as you can. From your question, there is a lot you don’t understand about taxes, and you’d be wise to get that sorted out before the year ends, while you can still do something about it.
You say you didn’t file last year. Were you doing Mary Kay then? If you had $400 income from MK, even if you didn’t have another job and didn’t file a joint return, you were required to file.
Items on Amazon Right Now for Tax Itemized Deduction Worksheet:
Tax Tip: 6 facts about choosing the standard or Itemized Deductions
When filing your taxes, you can choose to either take the standard deduction or to itemize their deductions. The IRS has put together the following six facts to help you choose.