Is there any way to set up zero withhholding on my paycheck?

Question

Personally, I think on of the biggest scams going is that the government gets my money from withholding immediately even though it's not due until tax day. So basically, it's an interest free loan to Uncle Sam so some bloated beaurocrat can spend my money ASAP.

Here's my question. Is there any way I can set up my paycheck to eliminate withholding so I can invest the money over the year and pay all my income taxes in April? Also, I do not qualify for withholding exemption as per my W4 form. Thanks

Answer 1

You can claim up to 9 exemptions on your W4 form without it having to be sent to the IRS for verification. Your payroll department is legally obligated to send all W4s claiming "exempt" or 10 or more exemptions to the IRS, who may then tell them not to honor it. Nine exemptions will put you at or close to $0 withholding.

The drawback is that you will end up owing a 10% underpayment penalty when you file your taxes. Rather than trying to get $0 withholding, just try to get the withholding as close as possible to your actual tax liability so you don't owe much or get much of a refund.

Answer 2

Taxes are due when the money is earned NOT when the the return is filed. This is why estimated payments are due if you have income that doesn't have withholding such as interest and income from self employment

It is true that you can claim exemptions on your W-4 so that you have no withholding, but doing so can cause problems for you.

1. You might have a penalty due to under withholding. The penalty can be avoided if: a) You had no tax liability in the prior year, b) Your withholding equaled 90% of the current tax liability or c) Your tax liability was less than $1,000.

2. If you have too many years of this, the IRS can force your employer to withhold a certain % of your pay in taxes.

Answer 3

Actually, the tax on the money IS due when you earn it. But you don't have to pay in more than you owe - if you do, then you ARE making an interest free loan to Uncle Sam. If you don't pay in close to enough, you will pay a penalty for underwithholding when you file your return.

Claiming exempt on a W-4 will mean that nothing will be withheld for federal income taxes. But there are strict rules on who can legally claim exempt, and if you do and are not eligible to, you can end up paying a large fine for claiming it illegally.

Answer 4

Sorry, but you've got it all wrong. The tax is due when the income is earned, NOT when you file your return. If you don't pay in enough through withholdings or estimated tax payments during the year there will be penalties and interest for underpayment of taxes when you file your return.

So, the short answer to your question is: No!

Answer 5

You CAN claim 'Exempt' on your W-4. However, unless you actually expect to have ZERO tax liability, that is illegal. In addition to your full tax liability, you will owe underpayment penalties and interest.

Forget the worksheet that comes with the W-4. Use the IRS on-line withholding calculator.

Brian G is misinterpreting old law. There has NEVER been a limit on the number of legitimate allowances you can claim on your W-4. It has been years since employers were required to routinely report W-4s claiming more than 10 to the IRS.

Answer 6

First off you need to know that tax day is the day you get paid. April 15th is only the day you get to settle up.