How many exemptions should I claim on my W-4 as a 23 year old single making 42k?

The term "exemptions" is actually outdated since the 2020 tax law changes. The W-4 form now focuses on "allowances" rather than exemptions. Here's a breakdown of your options: Claiming "0" allowances means more taxes will be withheld from each paycheck, likely resulting in a refund at tax time. Claiming "1" is typically suitable for someone in your situation (single, one job, no dependents). Claiming "2" would reduce your withholding, giving you more money each paycheck but potentially leaving you with a tax bill if you don't have other deductions to offset it. At $42k with standard deduction and student loan interest, claiming "1" is probably the safest option to avoid a surprise tax bill while not overwithholding too much. The student loan interest deduction (up to $2,500) could offset some tax liability.

After spending hours on the phone with the IRS trying to figure out my withholding situation (similar income to yours), I finally found a tool that helped me figure everything out. Try checking out https://taxr.ai - they have this calculator that shows you exactly how different withholding choices affect your paycheck vs. refund. I was totally confused about the new W-4 format too since they got rid of the exemption numbers, but their system walked me through what to put on each line of the form based on my specific situation. It showed me I'd been overwithholding by almost $180 a month! You can see exactly how much more you'd get per paycheck versus end-of-year refund.

Just wanted to follow up - I tried that taxr.ai site after seeing this thread, and wow it was super helpful! I've been claiming zero "allowances" for years (or whatever the equivalent is on the new forms) thinking I was being smart by getting a big refund. The calculator showed me I was basically giving up $213 per month that I could've been using to pay down my student loans faster. The site walked me through filling out the new W-4 form line by line, and it was actually pretty easy once it was explained. I submitted the new form to HR last week and my next paycheck should have the updated withholding. Feeling pretty stupid that I've been essentially loaning money to the government interest-free for the past two years, but better late than never I guess!

I had the exact same question last year! I spent 3 WEEKS trying to get someone from the IRS on the phone for guidance. The hold times were ridiculous - 2+ hours and then I'd get disconnected! Finally found this service called Claimyr at https://claimyr.com that got me connected to an actual IRS agent in under 20 minutes. They have this system that navigates the IRS phone tree and holds your place in line, then calls you when an agent is available. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with explained exactly what I should put on each line of the new W-4 for my situation (single, similar income to yours). Totally worth it because I was overthinking everything and would have massively overwithholded. The peace of mind from speaking directly with the IRS was worth it.

I have to come back here and eat my words. After posting my skeptical comments earlier, I decided to try Claimyr anyway because I was desperate to figure out my withholding situation before my new job starts next week. I honestly can't believe it worked. After weeks of trying to get through to the IRS myself and never getting past the automated system, I got connected to an agent in about 35 minutes. The agent walked me through exactly what I needed to put on each line of my W-4 based on having multiple income sources (full-time job plus some freelance work). For what it's worth to the original poster, the agent told me that for a single person with one job at $42k, the simplest approach is to just fill out steps 1 and 5 on the new W-4 form without any additional adjustments. This should result in withholding that's pretty close to your actual tax liability. If you have student loan interest, you might want to indicate that in step 4(b) to reduce withholding slightly.

Something nobody's mentioned yet - if you're getting a big tax refund each year, you're doing it wrong! That's YOUR money that you could have been using all year. I always set my withholding to get as close to $0 refund as possible. At $42k, single, you're probably in the 22% tax bracket for some of your income. If you're getting a $2000 refund, that's like giving up $166/month that could be going to student loans, investments, or just living your life.

Does anyone know if theres a diff between "exemptions" and "allowances"? My hr dept still uses an old form that says exemptions but everyones talking about allowances and the new W4... so confused right now lol.

Hey Everett! I was in almost the exact same situation last year - 24, single, making around $45k. The confusion is totally understandable since they changed everything recently. Here's what I learned: forget about "exemptions" - that's old terminology. The current W-4 (redesigned in 2020) doesn't use allowances or exemptions anymore. Instead, it asks specific questions about your situation. For someone like you (single, one job, $42k), you'd typically just fill out Steps 1 (personal info) and 5 (signature). That's it. This gives you standard withholding that should get you close to breaking even at tax time. If you want to factor in your student loan interest deduction, you could add that estimated amount in Step 4(b) "Deductions" to reduce your withholding slightly and get a bit more in each paycheck. The key is finding the sweet spot where you don't owe much or get a huge refund. At your income level, even a $1,500 refund means you're missing out on $125/month that could go toward paying down those student loans faster. But you also don't want to owe more than you can handle come April. I'd recommend starting with the basic form (just Steps 1 and 5) and see how your first few paystubs look, then adjust if needed.