I owe a lot of student loans (almost $200,000). Im not interested in paying off the loan or the balance.The best payment plan I could get was $2,000 a month. As a result the IRS withholds my tax refund every year which comes out to about $1,500 a year. In the past I claimed exemption because I was a grad student and made well under the maximum in actual income. Now im not qualified to claim exemption, and there is a $500 penalty that could be assessed if I do claim exemption. Could I claim exempt this year and just pay the $500 penalty if assessed at the end of 2007??? It seems cheaper then the $1,500 the goverment would just keep anyway and would allow me to keep $1000 extra this year as well as having the use of my money that was with held through out the year anyway? I only want to know about the TAX aspect of the issue. Yes i know all the things they can do in my state in regards to collection of the loan.
2007-01-19 08:56:46 · 6 answers · asked by Psyc Guy 2 in Business & Finance ➔ Taxes ➔ United States
They can only seize your refund if you are due a refund. If you calculate your withholding to owe the IRS $5.00, there is no penalty and no refund to seize.
That said, PAY YOUR LOAN. I'm not asking you to pay mine and I don't want to pay yours.
2007-01-19 10:05:06 · answer #1 · answered by STEVEN F 7 · 0⤊ 0⤋
Pay back the student loans. Stop leaning on the government. If you had $200K in student loans, you got some pretty good schoolin'. The government expects that you will keep your end of the bargain. So PAY YOUR TAXES and pay back your student loans. Become a productive member of society by contributing, not sliming.
That's my opinion.
Tax Advisor.
Oh, in answer to your question, NO you can't claim exempt because you don't meet the simple test of OWING zero tax in the year before.
2007-01-19 11:49:30 · answer #2 · answered by WealthBuilder 4 · 1⤊ 0⤋
You'd be liable for more than just the $500 penalty unless you made quarterly estimated payments, if you owed any significant amount of tax when you filed your return.
You're "not interested" in paying back your loan? Why should other taxpayers pay for your schooling? Don't you think that sounds just a little arrogant? You borrowed it, you owe it.
2007-01-19 09:42:05 · answer #3 · answered by Judy 7 · 1⤊ 0⤋
From the W4:
1) Last year I had a right to a refund of all federal income tax withheld because I had no tax liability and
2) This year I expect a refund of all federal income tax withheld because I expect to have no tax liability.
No, you do not qualify. Your employer may not even let you if you tried. If you fill out a false W4, they are required to withhold a "Single - 0" (the highest rate). You may get away with claiming "9" but who knows.....
2007-01-19 09:05:44 · answer #4 · answered by Wayne Z 7 · 2⤊ 0⤋
I would have to assume the $500 penalty would be on top of any taxes they decided you owed for that time period, so I'd suggest against it. The IRS is NOT a good thing to mess with. They can really screw you over.
2007-01-19 11:31:51 · answer #5 · answered by kittikatti69 4 · 0⤊ 0⤋
no
2007-01-19 09:06:43 · answer #6 · answered by Rainy 5 · 2⤊ 0⤋