Does anyone know if you are able to choose on each pay check to be exempt from federal tax with holding. In the end...will you have to end up paying back what you owe or will you be penalized in your taxes for choosing this? Even though your not really exempt from the federal tax with holding.
2006-11-21 01:41:56 · 4 answers · asked by elbellasera 2 in Business & Finance ➔ Taxes ➔ Other - Taxes
You are eligible to claim EXEMPT status if (1) in the prior year you had a right to a refund of all federal income tax withheld because you had no tax liability and (2) This year you expect a refund of all federal income tax withheld because you expect to have no tax liability.
The above may be true if you only worked part-time or part of the year and your taxable income did not exceed the sum of your standard deduction and personal exemption amounts.
Claiming exemption or claiming extra withholding allowances, when you are not entitled to them, in order to reduce your withholding to 0, may result in a year-end liability for underpayment that requires the calculation of interest and penalties. If all amounts are paid by the due date for the return, there would be no other consequences. If this were done persistently, you could be classified as a tax protester and come under close scrutiny by the IRS.
2006-11-21 01:59:58 · answer #1 · answered by Andreas 3 · 1⤊ 0⤋
You are allowed to change your W-4 allowances as often as you want to, which would change your withholding. You're not allowed to claim exempt unless you meet the rules listed on the W-4 form, but as long as you've paid in enough to cover your taxes at the end of the year, there probably wouldn't be any penalty. If you're short at the end and owe very much when you file your return, there can be penalties.
2006-11-21 10:44:21 · answer #2 · answered by Judy 7 · 0⤊ 0⤋
you can choose to be exempt only if you are. It is a federal offense to choose exempt if you truly are not. See the site below
2006-11-21 09:45:30 · answer #3 · answered by Patti T 3 · 0⤊ 0⤋
You can claim more dependants which will reduce your withholding;but when you file, if you owe alot;you can be required to pay a penalty plus interest.Additionally, they can choose to have you deduct/pay more the following year.
2006-11-21 09:50:48 · answer #4 · answered by Vic Timm?? 1 · 0⤊ 0⤋