- 1). Calculate how much mortgage interest you expect to pay for the year. Multiply your annual percentage rate on your mortgage by the balance of your mortgage for an estimate of the yearly interest. This gives you an approximate amount of interest for a full year. If you're not calculating for the full year, divide the estimated amount of interest by 12; multiply the result by the number of months remaining in the current year.
- 2). Estimate the amount of your other itemized deductions. These include state and local property taxes, as well as medical expenses that are more than 7.5 percent of your income. Miscellaneous business expenses are also included as itemized deductions on a tax return, such as uniforms and other unreimbursed expenses for your job that exceed 2 percent of your income. Add these deductions to your estimated mortgage interest.
- 3). Subtract the amount of your standard deduction from the itemized deduction estimate. For 2011, this is $11,600 for married filers and $8,500 for head-of-household filers. Single filers may take a standard deduction of $5,800; married people filing separately may take the same deduction. The result of this calculation is the increase in deductions that you receive by itemizing.
- 4). Divide the increase in deductions by $3,700 and round down to the nearest whole number. This is the amount of additional withholding allowances that you should claim, in addition to the other allowances for exemptions and dependents. Enter this total amount of allowances on your Form W-4 on Line 5. Give the form to your employer's payroll department.
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