The Question
Changing W4 Exemptions & TaxesChanging W4 Exemptions & Taxes
I have 0 exemptions marked on my W4, my spouse has a 1 on their W4. I know if I change the 0 to 1 we will probably owe money when doing taxes. However I know when you contribute to a 401k/Roth or charity you receive money back. If I change to a 1 on my W4 and contribute those earnings for the 401k/Roth or charity will the money I would then owe when doing taxes still be high or would the contributions take care of that and I would no longer owe a lot of money during taxes?
They have since updated W4, you can no longer select a number between 0 and 9. It’s now based on your filing status, spouses income (if applicable), and the number of dependents.
With that said, contributing to a 401k (pre-tax) will reduce your taxable income. You don’t need to change your W4 to take advantage of that. If you contribute to a Roth, whether inside your 401k or in a Roth IRA, it would not reduce your taxable income.
As for charitable contributions, it depends on what you contribute (cash, securities, tangible assets) and the amount. It sounds like you need to have a broader discussion around your goals and what you’re ultimately trying to do.
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