I am a full time college student and should soon be employed with UPS as a package handler, I hope. If I file for exempt does that mean that they won't take any taxes out my check? And if so, do I have to pay this money back? Also what exactly does filing for exempt mean?
2007-03-11 09:15:56 · 6 answers · asked by chi_06@sbcglobal.net 2 in Business & Finance ➔ Taxes ➔ United States
When you claim EXEMPT status on your Form W-4, you are certifying that you had zero tax liability the prior year AND you expect to owe zero tax for the current year. Given what UPS pays, unless you are working a VERY few hours per week you will have a tax liability for 2007 and therefore CANNOT claim EXEMPT status on your Form W-4.
Claiming EXEMPT means that no taxes will be withheld from your pay. If you actually do have a tax liability at the end of the year you will have to pay that in full all at once. There may also be penalties and interest for underpayment of taxes as the tax is actually due when the income is received, NOT on the filing deadline.
If you claim EXEMPT and your employer knows that you are likely to have a tax liability they are required to notify the IRS that you are claiming EXEMPT status and provide the IRS with a copy of your Form W-4. There are penalties for improperly claiming EXEMPT status.
2007-03-11 09:31:03 · answer #1 · answered by Bostonian In MO 7 · 2⤊ 0⤋
If you claim exempt on your W-4, they won't withhold income taxes from your check, although they will still take out social security and medicare.
You are only allowed to file the W-4 as exempt if you don't expect to make enough to have any tax liability for the year. If you file this way, and end up owing taxes, you can be subject to interest and penalties for underwithholding.
Filing exempt doesn't mean that you won't have to pay income taxes, just that they won't withhold any.
2007-03-11 21:01:35 · answer #2 · answered by Judy 7 · 0⤊ 0⤋
I assume you are talking about filling out your W-4 form, the one they give you when you begin a job.
Exempt status means that you are saying you will not owe any tax, and then they do not withhold any federal income tax from your paycheck.
Working for UPS, I assume you would earn enough that you would owe taxes, and have to pay when you file your tax return.
I would not claim exempt. If you wind up not having enough income to pay any tax, you will get a refund.
2007-03-11 17:18:39 · answer #3 · answered by irongrama 6 · 0⤊ 0⤋
Definitely would not recommend doing this either. I had a friend of mine that had to pay some serious penalties for claiming exempt and not being eligible. Having to come up with thousands of dollars to pay up to the federal government is not a good situation to be in...
I can tell you that you can save money on your filing expenses this year however. I filed with H&R Block this year, and then found the website below in the resource box. I filled out my information on their site, and they sent me a check for the amount of my filing expenses. I basically got all of H&R Block's protection services, but got my money back for paying for them from someone else.
2007-03-15 10:58:37 · answer #4 · answered by Jason C 2 · 0⤊ 1⤋
Filing for exempt means you pay taxes in someother fashion or really REALLY know how the tax codes works (eggplants use this crapola a LOT) UPS is a career stick with it good pay great benefits. If you file exempt you will have to pay it back with interest. Don't do it.
2007-03-11 16:20:18 · answer #5 · answered by Anonymous · 0⤊ 2⤋
If you fill out a W4 and declare yourself exempt, you are certifying that you are not subject to taxes. I can't conceive of how that could be possible, so DON'T DO IT! It will cost you big time, including jail time if you don't handle it exactly right.
2007-03-11 16:27:41 · answer #6 · answered by Lisa A 7 · 0⤊ 0⤋