The Difference Between Claiming 1 and 0 on Your Taxes

Disclaimer: LoanMart does not provide tax or accounting advice. The below information has been prepared for informational purposes only. You should consult your own tax and accounting advisors when filing your taxes or completing tax forms.

Filing taxes every year is an important obligation. If your income is from traditional employment, one aspect that precedes filing your taxes is filing your Withholding Certificate with your employer. If that’s done incorrectly, you could have too much or too little withheld with each paycheck, and therefore either get a refund or owe taxes when submitting your tax return. So, what’s the difference between claiming 1 and 0 on this tax form, and does it still matter?

Recent history of claiming 0 or 1

For background, before diving deeper into this topic, it’s important you understand the difference between allowances and exemptions:

• Allowances used to be marked on your W-4 form until 2020. Form W-4, also known as the Employee’s Withholding Certificate, is used when you start new employment or when important life circumstances change, such as your marital status, the number of children you have, the number of jobs you have, etc. You can also use this form at any time to ask your employer to change the amount that is withheld for taxes with each of your paychecks.
• Exemptions come in many different forms but have one thing in common: they reduce the amount of taxable income. 

As mentioned above, the IRS stopped using allowances with the 2020 revision of the W-4 form. The following information is therefore provided as a reference for taxes and W-4 forms prior to that, or for a potential return of allowances if the IRS chooses to add them back with a future revision of the W-4 form.

What’s the Difference Between Claiming 1 and 0?

Claiming 1 vs. 0 usually refers to the number of allowances someone entered on their W-4 form. The difference between claiming 1 and 0 is that the more allowances you claim, the less money is withheld by your employer for income taxes. As a result, the more allowances you claim, the more money you receive with each paycheck. However, when filing your taxes, the final taxes due for the year are calculated and you may either receive a refund or potentially owe money to the IRS, depending on how many allowances you claimed. 

What Does the Number of Allowances Mean?

Learning the meaning of the number of allowances can help you determine which options are best for you and your taxes. The best way to understand this is by knowing what withholding means first. Whenever your employer gives you a paycheck, they will withhold a portion of it to pay for taxes. So instead of owing one large sum during tax season, you pay taxes gradually throughout the year. This can be very convenient compared to the alternative, which is putting tax money you owe away by yourself and making sure you pay the correct amount when the time comes.

Independent business owners and people who do contract work are examples of workers who don’t get a portion of their paychecks withheld for them. But in most traditional employment cases, employers withhold taxes for their employees.

How Many Allowances Should I Claim?

After learning about the meaning behind allowances, you may wonder, “how many allowances should I claim?”. This depends on how many jobs you have, what your marital status is, and whether or not you have dependents, like children.

For example, a single person who works one job will claim fewer allowances than a married person with multiple children. If someone else claims you as a dependent, like a parent, you should not claim any allowances.

Depending on your life circumstances, you and your spouse can claim one allowance. If you are married but don’t have children and work jobs, you should consider each claiming one allowance.

Claiming 1 on Your Taxes

If you prefer to receive your money with every paycheck rather than waiting for a refund during tax season, claiming 1 on your taxes could be your best option. Claiming 1 reduces the amount of taxes that are withheld, which means you will get more money each paycheck instead of waiting until your tax refund. You could still get a small refund while having a larger paycheck if you claim 1. It just depends on your situation.

Claiming 0 on Your Taxes

When you claim 0 on your taxes, you have the largest amount withheld from your paycheck for federal taxes. If you claim 0, you can expect a larger refund check. By increasing the amount of money withheld from each paycheck, you’ll be paying more than you’ll probably owe in taxes and get an excess amount back – almost like saving money with the government every year instead of in a savings account. 

You might also need to claim 0 in a few different situations:

1. Your parents still claim you as a dependent – If you are employed (whether 16 or 20), and your parents still claim you as a dependent, you might have to claim 0 on your taxes because you cannot claim yourself, since your parents already do.
2. Other income – Another situation could be if you have other income where tax is not withheld, like a self-employed job, contract positions, selling stocks, or interest on savings. To avoid owing taxes for those situations, it might be best to claim 0.

Should You Claim 1 or 0 on Your Taxes?

How much you claim will be determined by your lifestyle and living situations. As mentioned previously, things like marital status, children, number of jobs, and more can help you determine what you should claim on your taxes. The best option for figuring it out is to talk with your accountant or contact an IRS agent.

Don’t worry about claiming the wrong allowances on your W-4, either. You can revisit your W-4 either electronically or with worksheets provided by the IRS. People make changes all the time for reasons like:

• Getting a second job

This is the most common reason that people have to adjust their W-4. Whether you have a home business or get another full-time job, you’ll want to change your W-4 to match it.

• Spouse gets a job/changes jobs

Any change of household income will also require a different tax bracket for allowances. Based on the income change, it may be beneficial when one spouse claims the allowances over another.

• Unemployed for part of the year

If you get laid off or stay unemployed for the remainder of the year, you may have too much tax withheld. But, if you are rehired within the same year, you’ll have to adjust for the downtime.

• You get married/divorced.

Tying or untying the knot will change your tax rate – primarily if both spouses work. Joint filing gives a lower tax rate and other deductions, so divorce will also reverse the benefits. Your withholdings could be inaccurate if not adjusted properly.

• You have a baby/adopt one

Having a child is a significant tax event since you now have a dependent as an allowance, and adoptions also give you another tax credit. Either of these situations can reduce your withholding amount with the tax benefits, so you’ll want to adjust it.

What Do I Claim on My W-4 in 2025?

Most people have asked themselves, “what do I claim on my W-4?” in a moment of confusion. The good news is you no longer have to claim allowances on your W-4 since the IRS updated the W-4 form in 2020. The updated form no longer makes use of allowances, but instead provides for a 5-step process to accurately let your employer know about your withholdings:

• Step 1 is to confirm your personal information and filing status
• Step 2 is used for multiple jobs (including by your spouse as applicable)
• Step 3 can be used to claim dependents and other credits
• Step 4 allows you to set amounts for other income, deductions and withholdings
• Lastly, Step 5 is to date and sign the updated form

If your tax situation is simple, you may only need to complete the required steps 1 and 5. However, if you’d like to continue to claim dependents or have other sources of income, you may need to work through all steps.

One thing to understand is that even though the IRS published the revised form in 2020, your tax withholdings may still be based on your old W-4 which used the allowance methodology – employers were not required to obtain an updated W-4 form from their employees just because of the form redesign in 2020.

If you’ve been working the same job for a while with little change in your life, you likely don’t need to worry about filling out a new form. If you have experienced life-events such as your marital status has changed, you’re working another job, or you’ve welcomed a new child into your home, these are all things that should prompt you to review and potentially revise your W-4.

Also, always keep in mind that income tax forms and the rules and regulations for filing taxes in America can change yearly. It’s essential to keep yourself up to date with changes by the federal government or within your state regarding W-4s and taxes!

Reasons Why You May Owe During Tax Season

Getting through the intricate process of filing taxes can be rewarding if you receive a refund! However, if you end up owing taxes after filing your tax return, you may be confused. Although everyone has a different financial situation, below are some of the most common reasons why you may owe taxes this year:

• Changes in Your Marital Status: Significant life changes, like marriage or divorce, can often affect your tax situation. In some cases, you may end up owing more money on your taxes because your marital status changed. For example, if you and your partner decide to file taxes together, that can result in you having a larger tax bracket than you would if you were filing separately, as the Head of Household (HOH), or as a single person. In the unfortunate event that you’re divorced, you lose the option to file as married, which could mean owing more in taxes.
• Insufficient Tax Withholding: It’s understandable if you want to keep as much as possible from your hard-earned paycheck. However, if you don’t withhold enough of your paycheck during the applicable tax year, you might owe more than you think you will during tax time. Taxes are designed to be “pay as you go” and you can either make estimated quarterly payments or automatically withhold money from your income – whether you receive a regular paycheck or an alternative source of income, such as SSI benefits. Both options help you avoid an unfortunate surprise during tax time or a penalty for underpaying. Aim to pay at least 90% of your estimated taxes during the year!
• Earning Extra Cash: As the inflation rate slowly rises throughout the country and the cost of living increases, you may have to get a side hustle to make extra money if your primary job isn’t enough to handle your living expenses or support your lifestyle. However, it’s worth mentioning that a self-employed person will owe taxes if they earn more than $400 per year on any kind of side gig. It’s smart to set aside a little bit of money each time you get paid to be as prepared as possible for the upcoming tax season.

If you see yourself owing money on your taxes and you need financial assistance, you can consider negotiating with the IRS and setting up a payment plan or using other available resources, like a car title loan serviced by LoanMart. 

2023 Tax Year Changes 

Some significant tax changes implemented in 2023 involved adjustments in retirement plans. Listed below are some of the most notable amendments taxpayers experienced:

• The Required Minimum Distribution Age (RMA) for 401(k) plans was raised to 72 Years 
• The IRA Catch-Up limit increased to $1,000
• Part-Time employees who work for 2 consecutive years can access a 401(k) plan
• You can withdraw money from a retirement account early without any penalties as long as funds are used on certain expenses
• Employers can offer small financial incentives to encourage employees to contribute to a retirement plan

2024 Tax Year Changes

The tax year changes seen in 2024 have some similar adjustments from the previous year. Listed below are some of the tax year changes you may see when filing your taxes this year:

• Standard deduction amounts increased for each filing status
• People under 59.5 years old can make more early withdrawals from retirement accounts without penalties
• Flexible Spending Account limit increased to $3,200
• The income thresholds to qualify for several tax rates increased
• You can add more money to your Health Savings Account – up to $4,150 as an individual or $8,300 as a family

Income Tax Rates

Are you wondering what the tax brackets and federal income tax rates are in 2024? Although the tax rates were essentially unchanged, the income tax brackets for people in America were a little higher due to inflation during 2023. 

Here’s a quick breakdown of the tax brackets for the 2024 fiscal year across all the different filing statuses:

Can I borrow money to pay taxes?

To owe absolutely nothing on your federal tax returns, you need to double-check that you’re making all of the correct estimations and adjustments based on your personal circumstances.

If you ask yourself many tax-related questions like “how many allowances should I claim” and “should I claim 0 or 1 if I am married” or anything else related, you may want to consider reaching out to a tax professional in your area.

If you ever find yourself in the unfortunate situation of owing the IRS after filing your taxes, you may wonder if you can borrow money to pay your taxes. In short, yes, you can obtain a loan to pay for taxes that you owe. However, you may first want to consider short-term or long-term payment plan options that the IRS provides.

If you don’t qualify for an IRS payment plan, or if your tax payment plan still leaves you short on cash at the end of the month, a title loan serviced by LoanMart may be able to provide you with the funds you need!

Learn About How to Potentially Get Money Quickly!

Don’t stress about not understanding the number of allowances meaning or ‘what do I claim on my W4’– there are plenty of resources to help you file your taxes correctly.

If you find yourself needing money now and cannot wait for your tax refund, you have options for accessing funding quickly. LoanMart is now servicing car title loans online within many states in the United States. Click on one of the area links below to find a title loan serviced by LoanMart close to you.

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