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Although Kathleen is entitled to five personal and dependency exemptions on her income tax return, she claims only one withholding allowance on Form W-4.
A. Is it permissible to claim fewer allowances than an individual is entitled to ? ( Yes or No)
B. Why would an individual claim fewer allowances?
a. An individual might claim fewer allowances because they are an unmarried taxpayer and qualify for head of household filing status.
b. An individual might claim fewer allowances because they have high deductions, losses, or credits.
c. An individual might claim fewer allowances to decrease the amount of tax withheld, if they anticipate that they will receive a large refund at the end of the year. This situation occurs for taxpayers earning wages and nonwage income.
d. An individual might claim fewer allowances to increase the amount of tax withheld, if they anticipate that taxes will be owed at the end of the year and they do not wish to make quarterly estimated tax payments. This situation occurs for taxpayers earning wages and nonwage income. C. Is it possible for Kathleen to claim more than five withholding allowances? a. Kathleen can claim more than five withholding allowances in a tax year if she takes the standard deduction, is married, and her spouse is employed and has earned income. b. Kathleen cannot claim more than five withholding allowances because the IRS imposes a limitation on the amount of withholding allowances an individual can claim. c. Kathleen can claim more than five withholding allowances in a tax year if she has larger than average deductible expenses (for example, mortgage interest expenses on a newly-financed house) relative to the average for a family of Kathleen's income amount. d. Kathleen can claim more than five withholding allowances in a tax year if she takes the standard deduction and works two jobs

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