Is it legal to claim, like, 10 dependants so I can receive more money from my paycheck?

Question

I know I will probably have to owe more money at the end of the year but is it technically legal?

How about exempt status? What does it take to claim exempt?

Answer 1

Be careful... there are some seriously wrong answers on here. People seem to keep getting confused between "dependents" and withholding "allowances". The number you claim on your W-4 is based on allowances, not dependents.

You get 1 for yourself if you're not a dependent, 1 for the first source of income (or if the spouse's is less than $1000), 1 for each dependent, 1 for head of household status, 1 for having child or dependent care expenses over $1500 to claim, 1 or 2 depending on your income for each child eligible to be claimed for child tax credit.

There are additional worksheets on the W-4 and once you've added all that up, THAT's the most you can claim. You CANNOT claim more allowances than you are eligible to based on that worksheet and the other worksheets for adjustments. You can request to have more, but not less money taken out.

Regardless of what others say, if you knowingly claim more allowances than allowed on a Form W-4, even if you plan to claim the correct number of exemptions on your tax return and pay all taxes, it can be considered willful evasion of tax. (Smith, David Wayne v. U.S., (1996, DC IN) 78 AFTR 2d 96-5708 , 202 BR 277, 96-2 USTC ¶50426 . )

Employer's are required to send to the IRS withholding certificates with allowances over a certain number, and may send them in for anything that looks suspicious.

So, no, it is not legal to claim more "allowances" than you are entitled to. Your legal "allowances" may very well be more than your "exemptions" on your tax return.

Hope this helps!

Regarding your additional question regarding complete exemption: If you know you're going to have to pay, and you've already said you probably will, you can't qualify. And it's not just about whether or not you have to pay. In order to claim exemption, you had to have had $0 tax liability in the prior year. That's not just what you paid; your liability is your tax owed prior to your Federal Withholding being applied to it. In addition, you have to have reason to expect that you won't have any liability this year either. Sorry.

Additional thanks to Bostonian: Thanks for the correction on the employer requirement. It's been a while since I had to do payroll, and I knew you used to, but I couldn't find anything saying you didn't anymore, but I was still worried about having it in my answer. :-)

Answer 2

What a load of bad info!

You are legally entitled to claim enough exemptions so that your total tax paid in equals or exceeds 90% of your Federal tax liability OR 100% of the pior year's liability. These are the targets you must hit to avoid penalties for underpayment of tax. As long as you hit those targets, the IRS will NOT come looking for you. A family of 4 with $50,000 in itemized deducitons could probably claim more than 10 exemptions and still not be underwithheld.

Employers are no longer required to automatically send copies of Form W-4 to the IRS if 10 (not 8) or more exemptions are claimed. Employers are only required to send copies upon request from the IRS. The IRS will normally only make such a request IF you have paid in less than 90% of your tax liability AND your income is limited to wages subject to withholding.

To claim EXEMPT, you must have had $0 tax liability the prior year (that's $0 on the Total Tax line, not just getting a refund) and you must reasonably expect to have $0 tax liability for the current tax year. (If you're a Single taxpayer making more than $8,750, that won't happen.)

If you abuse the system, the IRS can direct your employer to withhold at a rate that the IRS decides. (The only Lock-In letter I ever saw stated Single and 0. The guy had a wife and 3 kids, that hurt him badly on payday.) You can also be penalized for filing a false or abusive W-4, up to $500.00

Answer 3

When you sign the W-4 you are declaring, under penalty of perjury, that the information is true, correct, and complete. So you are committing perjury you if submit a false W-4. However, the IRS never seems to mind when we claim too few exemptions :)

I have never heard of a case where the individual was actually prosecuted, but I suppose it could happen. The more likely scenario would be that the IRS would determine that not enough income tax is being withheld from your wages and send your employer a letter called a "lock-in" letter. The "lock-in" letter will specify the maximum number of withholding exemptions they may use for the purposes of computing your withholding. So if the "lock-in" letter sets a maximum of 4 exemptions then they will be required to withhold based on 4 rather than the 10 you claimed on the W-4.

Answer 4

Not if you're going to owe money at the end of the year, it isn't legal. You are only allowed to claim the number of allowances that, to the best of your knowledge, will have you end up even at the end of the year.

If you claim exempt, then nothing will be withheld for income taxes. You are only allowed to claim exempt if you had no tax liability the previous year and don't expect to have any in the current year, so doesn't sound like that's an option for you. If you claim exempt and aren't, you will be penalized.

Answer 5

There is not legal limit on the number of allowances you can claim on the W-4 (technically you don't claim dependents). On the other hand if you owe more than $1000, you may be subject to under withholding penalties. Jim stated that employers have to report any W-4s that claim more than 8. That is old law. Routine reporting is no longer required. Even when it was, you could still claim an unlimited number IF your tax situation justified the number.

Answer 6

yes and no...

Altering the number of dependents you claim is a good way to adjust the amount of tax withheld to have it end up being closer to correct. When done for that purpose (minimize amount owed OR refunded) the IRS will not care.

If you turn in the wrong number in order to have inadequate withholding, then you can be fined for it. There are penalties in the tax code for trying to have access to your own money until you actually owe the taxes (on April 15th)

Answer 7

<> Just because something it legal doesn't mean it's right. <> There's a reason you can't spell 'assume' without '***'. People who assume too much end up making asses of themselves. < murder, how come?>> Doesn't make sense, does it - and yet, there you are advocating people merely ASSUME the government is right! <> WRONG! <> Ad hominem attacks hurt your credibility. Perhaps Marc, like me, doesn't see too much in the way of credibility when reading your question. < is NOT murder.>> The term "fetus" literally means "the young in the womb". The fetus IS a living human being. Life begins at conception, not birth nor some arbitrary point in between. Therefore, every abortion constitutes the murder of an unborn human being. <> But the fetus IS human. Therefore, abortion IS murder. < and stupid imagination.>> What's so narrow minded about acknowledging the unborn for the living human beings they are? Since you're unable to do that, wouldn't that suggest your mind is in fact more narrow than mine? < person NOT two.>> That just goes to show how schizophrenic human institutions can be - and you want to ASSUME such an institution (the government) is right.

Answer 8

Actually taxes are the biggest lie out there. If you read the codes yourself you will find that the average person pay is not subject to taxation. If you file the correct way and the way the law is written you will get back 100# of your money paid in. Most accountants and tax attorneys dont want the average American to know this because 60% of Americans use them to file thier taxes.

Go to www.losthorizons.com and you will get the real story from people that are getting back all thier money.. One employer finally started doing it last year too and got back over 180k paid in in employee taxes.

Answer 9

I'm an accountant...Employers are required to send a copy of any employee's W-4 to the IRS, who claim more than 8 exemptions.

Answer 10

Technically yes you can do it. But then you will have to explain to the IRS as to why you did. The penalty is not worth it.

My father was a Auditor