New PGY1 Question

Discussion in 'Finance and Investment' started by therunner12, Apr 20, 2017 at 11:10 AM.

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  1. therunner12

    therunner12 5+ Year Member

    570
    7
    Apr 26, 2011
    Texas
    I'm filling out a W4 for my residency and have started reading about 'above the line' deductions. I will be able to claim the typical 'student loan interest' and the 'moving expenses'. Do these go anywhere on my W4 or will I just wait until next April to get a tax refund for these?

    I'm sorry if this a terribly simple question, just trying to see if I can keep that money in my pocket rather than receive it as a refund.
     
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  3. fahimaz7

    fahimaz7 10+ Year Member

    3,208
    141
    Jul 18, 2004
    Colorado
    You can go ahead and try and forecast your tax liability using standard deduction, moving credits, and any other deduction/credit you may be elegible for. If your only income (assuming you are single) is your resident contract you will likely qualify for all deductions and not have much tax liability (50k salary, 6300 in standard deduction, 4500 for claiming yourself, - moving credit and student loan interest, - 401k contributions = taxable income). If your taxable income is in the 30-35k range your tax burden is very low (4700 in federal taxes if single @35k taxable income).
     
  4. Mman

    Mman Senior Member 10+ Year Member

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    Mar 22, 2005
    are you really paying much student loan interest as a resident? Not deferring during residency?
     
  5. sazerac

    sazerac rye sense of humor 5+ Year Member

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    Feb 26, 2012
    There are only 2 numbers that matter on a W4: the claimed number of exemptions and the extra amount of money you want withheld.

    The more you put into the second number (this number is often zero), the more money disappears from your paycheck. The more you put into the first number, the less is withheld from your paycheck.

    If you want a bigger paycheck and less money withheld from your paycheck, crank up the first number. I think my personal record was eleven, as a single person in the mid 1990s who had a LOT of above and below the line deductions that caused my tax bill to be unusually small that year.
     
  6. therunner12

    therunner12 5+ Year Member

    570
    7
    Apr 26, 2011
    Texas
    My loans arent that bad and I can do a standard repayment plan, so yeah I'll be making significant loan payments.

    Thanks for this explanation. How do you calculate that number 11? I have two right now, one for being single and one for being independent.
     
  7. sazerac

    sazerac rye sense of humor 5+ Year Member

    1,967
    1,982
    Feb 26, 2012
    My income and tax liability was simpler and more predictable back then. I basically knew how much total tax I would owe for that year. I just kept filing a new W4 every month or two until my year's withholding matched my year's tax liability.

    Thus it wasn't precalculated with a formula. It was found empirically.
     
  8. Smart Money MD

    Smart Money MD 2+ Year Member

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    7
    Mar 20, 2015
    I think that I filled out '7' exemptions back in my training and ended up with a minimal amount of tax liability at the end. Basically for internship you only work for half a calendar year so you will have a bit of extra money refunded after tax season if you have a small number of exemptions.
     
  9. MeatTornado

    MeatTornado 7+ Year Member

    3,807
    2,674
    Dec 1, 2008
    Physician
    There's a limit to the amount of interest you can deduct. I think it's $2500


    Sent from my iPhone using SDN mobile app
     

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