What's the difference between allowances and dependents?
You report your personal allowances to your employer on Form W-4. Your employer will use the number of allowances you report to figure how much tax to withhold from your paycheck. The greater the number of allowances, the less tax your employer will withhold.
The amount withheld is payment for your tax liability, which will be determined when you file your return. If you withhold less than your tax liability, you'll usually owe when you file your return. If you withhold more than your tax liability, you'll receive a refund.
A dependent is an example of a personal allowance. On your W-4, you can claim 1 personal allowance for every dependent. You can also add to your personal allowances when you know of certain situations which will reduce your overall tax liability. Examples of such situations include:
Personal exemptions for you and your spouse
Filing head of household
Claiming the child or dependent care expenses credit
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This advice is for general information purposes only and may not apply to you. Every tax situation is different. This is not intended to be legal advice. Taxpayers should consult an H&R Block Tax Professional regarding their individual tax situation.