Quote:
|
Originally Posted by yellowmac
I do think that there should be the option for those with enough self-discipline to allow no withholding. I'd rather keep all of my paycheck, put aside the money I'll need for taxes in a high-yield online savings account and pay the lump sum come Apr 15.
|
You do have this option, with at least one exception. You are allowed to elect to have not enough withheld to pay what is due on 4/15. However, if you end up owing more than 10% more than the eventual tax due, you will have to pay a penalty. Ex.1- Tax owed - $3000. amount withheld $2700. 4/15 - you pay $300. No penalty. Ex.2- Tax Owed - $3000. amount withheld $2600. 4/15 - you pay $400 + penalty.
There are so many rules and exceptions it is hard to give firm rules because everyone's situation is different. Ex. Me - I have my own business which is commission based. I pay no taxes on any income throughout the year. Because the commissions are variable in both amounts and frequency there is a form that I can complete and include with my tax form so I do not have to pay any penalty. Result - I pay all of my tax due with my return on 4/15. The extra money is nice but, damn, writing that check on 4/15 is getting harder every year.