no tax withholdings okay? - Tilted Forum Project Discussion Community

1337haxor · 07-28-2005, 05:02 AM

Hey,
I was wondering if it is okay or even legal to declare on my W4 form so no taxes are withheld from my paycheck. I know I'd have to pay them back come income tax time and I'm okay with that. It just makes me cringe thinking about giving the government free money for a year and not being able let the money grow.

Thanks

ShaniFaye · 07-28-2005, 05:12 AM

I have no federal tax withheld from my check, and havent for aout 10 years. I do have state taken out....the refund from them usually covers what I owe in federal each year. On your w4 you can claim up to 9 before the company has to, by law, let the IRS know..if you claim 10 they have to inform the IRS each year and then they start looking at your ass lol

sailor · 08-02-2005, 06:24 PM

Quick question, and pardon me for sounding tax-illiterate (I practically am)... How do I go about filling out the W4 to make sure that no taxes are withheld? I don't see any obvious place to just tell them not to take it out of my paycheck, and I too would like to do this.

Merlocke · 08-02-2005, 07:59 PM

In Canada, there is a form you can fill out called a deduction from source where you can elect to not pay income taxes right away, and have it all setlled at the end of the year. Be wary though, it's not for the faint of discipline

Redlemon · 08-03-2005, 05:55 AM

I could be remembering incorrectly (my wife does our taxes), but I thought that if your "amount due" at filing time is too large, the feds make you pay quarterly estimated payments the next year.

ShaniFaye · 08-03-2005, 06:04 AM

from the IRS website http://www.irs.gov/publications/p505/ch02.html#d0e4865

General Rule

You must pay estimated tax for 2005 if both of the following apply.

1.You expect to owe at least $1,000 in tax for 2005, after subtracting your withholding and credits, and
2.You expect your withholding and credits to be less than the smaller of:
1. 90% of the tax to be shown on your 2005 tax return, or
2. 100% of the tax shown on your 2004 tax return. Your 2004 tax return must cover all 12 months.

Tip
If all your income will be subject to income tax withholding, you probably do not need to pay estimated tax.

tooth · 08-04-2005, 12:32 PM

My wife and I have three children(6,5,1). Thanks to the Child Tax Credits, we recieved a refund this past year that was more than we had paid in. I checked my W4, turns out it was still at a 3. I got a new one, to change it, and the worksheet said I should declare 11! I chickened out and only upped it to 5.

AVoiceOfReason · 08-09-2005, 08:26 AM

And by all means, don't have more withheld than you need to avoid paying in April; my favorite tax years are those in which I owe at the end of the year. A refund means I let the goverment have my money interest free for the big part of the year.

tooth · 08-09-2005, 08:53 AM

Quote:

Originally Posted by AVoiceOfReason

And by all means, don't have more withheld than you need to avoid paying in April; my favorite tax years are those in which I owe at the end of the year. A refund means I let the goverment have my money interest free for the big part of the year.

Great advice. So many people just don't get that. While getting a fat refund was a nice surprise this past year. You can be damned sure that I would rather have the extra $200 in my paycheck every month, rather than the government having it all year. Conversly, I don't like having to pay in very much, if at all when April rolls around. A normal tax year for us, gets us within about $100 one way or the other. Some years we pay a bit, some years we get a little refund.

Anxst · 08-09-2005, 02:32 PM

I wish still had this problem. I have no federal and little state withheld from my check, and I still don't make enough that I have to pay in at the end of the year since I got married.

I need a raise

SirLance · 08-09-2005, 02:45 PM

Rather than taking the risk of being charged an underpayment penalty, you should sit down with a CPA who is also an Enrolled Agent and determine the proper level of withholding. That way, you don't get hit with penalties, or a large bill.

Captain Nemo · 08-24-2005, 12:20 PM

Ok, little known loophole in the law. But first the facts. You must have 90% of your current tax liability paid in by the end of the year (or 100% of your prior year liability), so you can not exempt yourself and pay all of it on 4/15. ShaniFaye, I would love to know how you have managed to dodge that bullet. Alright, but if you can remain fiscally prudent, there is a way to defer paying in your liability until the last payroll run of the calendar year. Whereas estimated payments have definitive dates where they are deemed paid for purposes of determining whether you have paid your tax in timely, withholding is deemed paid in ratably throughout the year irregardless of when it is actually paid in.

So, you could exempt yourself from withholding for almost the entire year (or set it really low), and then determine your year's actual liability and have that amount deemed withheld from your paycheck that you would receive in December. I wouldn't recommend this to most of the people I know, as most are not financially savvy enough to budget to pay it in a lump-sum basis.

I take a different approach with my own withholding. Every September I run a pretty accurate projection of what my actual tax will be when I file on April 15th. When my withholdings get to exactly 92% (I leave a little cushion in), I exempt myself from withholding, so from anywhere from October or early November, I have no federal tax withheld. This is actually good planning for the holidays, as I have decent cash flow. After 12/31, I reset my withholdings, let the expected balance due float in a 3 month CD and pay the balance due on 4/15.

07-28-2005, 05:02 AM	#1 (permalink)
1337haxor Insane Location: PA	no tax withholdings okay? Hey, I was wondering if it is okay or even legal to declare on my W4 form so no taxes are withheld from my paycheck. I know I'd have to pay them back come income tax time and I'm okay with that. It just makes me cringe thinking about giving the government free money for a year and not being able let the money grow. Thanks

07-28-2005, 05:12 AM	#2 (permalink)
ShaniFaye Submit to me, you know you want to Location: Lilburn, Ga	I have no federal tax withheld from my check, and havent for aout 10 years. I do have state taken out....the refund from them usually covers what I owe in federal each year. On your w4 you can claim up to 9 before the company has to, by law, let the IRS know..if you claim 10 they have to inform the IRS each year and then they start looking at your ass lol __________________ *I want the diabetic plan that comes with rollover carbs. I dont like the unused one expiring at midnite!!*

08-02-2005, 06:24 PM	#3 (permalink)
sailor beauty in the breakdown Location: Chapel Hill, NC	Quick question, and pardon me for sounding tax-illiterate (I practically am)... How do I go about filling out the W4 to make sure that no taxes are withheld? I don't see any obvious place to just tell them not to take it out of my paycheck, and I too would like to do this. __________________ "Good people do not need laws to tell them to act responsibly, while bad people will find a way around the laws." --Plato

08-02-2005, 07:59 PM	#4 (permalink)
Merlocke Location: Canada	In Canada, there is a form you can fill out called a deduction from source where you can elect to not pay income taxes right away, and have it all setlled at the end of the year. Be wary though, it's not for the faint of discipline __________________ -=[ Merlocke ]=-

08-03-2005, 05:55 AM	#5 (permalink)
Redlemon Devoted Donor Location: New England	I could be remembering incorrectly (my wife does our taxes), but I thought that if your "amount due" at filing time is too large, the feds make you pay quarterly estimated payments the next year. __________________ I can't read your signature. Sorry.

08-03-2005, 06:04 AM	#6 (permalink)
ShaniFaye Submit to me, you know you want to Location: Lilburn, Ga	from the IRS website http://www.irs.gov/publications/p505/ch02.html#d0e4865 General Rule You must pay estimated tax for 2005 if both of the following apply. 1.You expect to owe at least $1,000 in tax for 2005, after subtracting your withholding and credits, and 2.You expect your withholding and credits to be less than the smaller of: 1. 90% of the tax to be shown on your 2005 tax return, or 2. 100% of the tax shown on your 2004 tax return. Your 2004 tax return must cover all 12 months. Tip If all your income will be subject to income tax withholding, you probably do not need to pay estimated tax. __________________ *I want the diabetic plan that comes with rollover carbs. I dont like the unused one expiring at midnite!!*

08-04-2005, 12:32 PM	#7 (permalink)
tooth Addict	My wife and I have three children(6,5,1). Thanks to the Child Tax Credits, we recieved a refund this past year that was more than we had paid in. I checked my W4, turns out it was still at a 3. I got a new one, to change it, and the worksheet said I should declare 11! I chickened out and only upped it to 5.

08-09-2005, 08:26 AM	#8 (permalink)
AVoiceOfReason Psycho Location: Greenwood, Arkansas	And by all means, don't have more withheld than you need to avoid paying in April; my favorite tax years are those in which I owe at the end of the year. A refund means I let the goverment have my money interest free for the big part of the year. __________________ AVOR A Voice Of Reason, not necessarily the ONLY one.

08-09-2005, 02:32 PM	#10 (permalink)
Anxst Condensing fact from the vapor of nuance. Location: Madison, WI	I wish still had this problem. I have no federal and little state withheld from my check, and I still don't make enough that I have to pay in at the end of the year since I got married. I need a raise __________________ Don't mind me. I'm just releasing the insanity pressure from my headvalves.

08-09-2005, 02:45 PM	#11 (permalink)
SirLance Junkie Location: In the middle of the desert.	Rather than taking the risk of being charged an underpayment penalty, you should sit down with a CPA who is also an Enrolled Agent and determine the proper level of withholding. That way, you don't get hit with penalties, or a large bill. __________________ DEMOCRACY is where your vote counts, FEUDALISM is where your count votes.

08-24-2005, 12:20 PM	#12 (permalink)
Captain Nemo Insane Location: In a forest of red tape (but hey, I have scissors)	Ok, little known loophole in the law. But first the facts. You must have 90% of your current tax liability paid in by the end of the year (or 100% of your prior year liability), so you can not exempt yourself and pay all of it on 4/15. ShaniFaye, I would love to know how you have managed to dodge that bullet. Alright, but if you can remain fiscally prudent, there is a way to defer paying in your liability until the last payroll run of the calendar year. Whereas estimated payments have definitive dates where they are deemed paid for purposes of determining whether you have paid your tax in timely, withholding is deemed paid in ratably throughout the year irregardless of when it is actually paid in. So, you could exempt yourself from withholding for almost the entire year (or set it really low), and then determine your year's actual liability and have that amount deemed withheld from your paycheck that you would receive in December. I wouldn't recommend this to most of the people I know, as most are not financially savvy enough to budget to pay it in a lump-sum basis. I take a different approach with my own withholding. Every September I run a pretty accurate projection of what my actual tax will be when I file on April 15th. When my withholdings get to exactly 92% (I leave a little cushion in), I exempt myself from withholding, so from anywhere from October or early November, I have no federal tax withheld. This is actually good planning for the holidays, as I have decent cash flow. After 12/31, I reset my withholdings, let the expected balance due float in a 3 month CD and pay the balance due on 4/15.