Your taxable earnings will be less thereby reducing the amount of w/h. Your refund at the end of year will prob be smaller being your employer w/h less from your check each pay period due to making additional contributions to your 401k.
You can contribute up to $17, 500 for 2014.
Personally, I would claim 1 exemption -- why let the IRS use YOUR money all year w/o paying you interest?
.... contribute as much as you can to your ira -- max it out if possible.
usually your 401k is based on your base salary, your exemptions have nothing to do with it.
but the 401k amount does reduce your taxable income
always contribute at least the amount which the company matches
I highly recommend contributing to your 401k as much as possible. Not only does it lower your taxes and save for retirement, but it's also protected from creditors in the event of a bankruptcy.
Yes, increase your withholdings in order to lower your tax refund. You can use the money each paycheck better than giving the government an interest-free loan each year. I currently claim 8 so that my refund is very small each year.
The number of exemptions you claim has nothing to do with 401(k) contributions because the withholding tables automatically correct for taxable income.
You don't specify your income but with $10K to your 401k your income is pretty high. What that tells me is that $1,900 refund is really cutting it pretty close, if you went up to 1 exemption would you end up paying?
Currently, I contributed roughly about $10k annually to my 401k. My current exemptions are 0.
If I claim myself, obviously my take home pay will be more, but I would increase the amount contributed to my 401k. So obviously more would go to my 401k.
Would you recommend doing this?
Note, last year I received almost $1,900 as a tax refund.
