Did I just ruin my life?

Question

I put I was exempt on my W-4's in March but, i changed it last month July because I realized I was earning too much to be exempt. As a result they haven't taken enough out from my paychecks. Is there anyway I can have this resolved now before the end of the year is over? Am I going to have to go to jail? The amount I made was around 6,000 dollars. I am a good student, dean's list with a double major. I had hoped to apply to graduate schools in the fall. I have no criminal record. Is this one mistake going to ruin my life? Is there anyway I can pay back what I owe now?

In addition, I work for my school and after I changed my W-4's back to zero with holdings they still aren't taking out taxes for social security why is this and how can I fix that?

I have two jobs. The one in retail has been taking money out for social security etc. The one for my school still isn't even after I changed my W-4's to Zero. Why is this? How can I change it?

What concerns me is that by not fixing my W-4 right away, isn't that tax evasion/ tax fraud/ perjury. The tax should have been with held on the day i was paid so i think i have to pay an interest of 3% + for each day with held. Also, that increases with each 60 day period so i could end up owing 100% or twice the amount with held. Face felony charges for tax evasion and having a false information on my W-4 and face up to 1 year in jail and a 500 dollar fine. All for 750 dollars of taxes not with held. I didn't realize any of this until two days ago and i haven't been able to sleep since. This could ruin my life... i am afraid. I won't be able to go to grad school and I won't be able to help people in a job through schools and my life will be over. So much potential wasted for 750 dollars. Is this true? Is there anyway I can pay now? Is there anyway I can contact the IRS and have them help me? I'm freaking out here.

Answer 1

The big question here is who is paying for your schooling. If you are paying for it, then tyou will probably havenothing to worry about at all. You probably took 4 courses a semester, and paid over 10000 in tuition unless you got it all on scholarship. You are eligible each year for up to 20% of the first 10000 in tuition and fees as a tax credit---or, if you use up 10K in tuition that year for a full 2000 dollar tax credit. Over your lifetime, you cannot take more than 10K in Lifetime earning credit, but there are other college deductions.
If you are working full time and are taking at least half your credits in that line of work, you can write off other expenses as well if it meets minimum standards and then some.
So, even without the appropriate amount, based on your educational credits alone, you may be off the hook and still get a sizeable refund back.
Go to a good Tax pro, but you did not make so much money that it would hurt if you went to a HR Block office and tok their advantage for a few extra dollars.
But, if you paid, any money in tuition, and get a 1088 T--IRS Tuition statement, you are in decent shape. That tax credit will offset your exemption error.
My whole family was in the business for years.

Answer 2

Relax - you are definitely not going to jail, and you haven't done anything to mess up your life. The worst thing that could happen is when you file your return, you could owe some money. If you owe over $1000, you could owe an additional amount for underwithholding.

You could fill out yet another W-4 and request that they take out a little extra from each pay until the end of the year - you'd put that on line 6 - then you might be able to break about even for the year.

If the $6000 was your total income for the year, you'll owe very little, maybe a couple hundred dollars total. If you are still working when school starts back up, your tax liability will be more, so you probably want to get some extra taken out now to avoid owing when you file your return.

Good luck - and QUIT BEING SO WORRIED!

Answer 3

You won't go to jail so keep calm. If you wind up at the end of the year owing more than you had withheld, you'll be subject to a penalty and that penalty will be added to your tax bill. You changed it in July but be sure your employer is withholding as much as possible. If you can afford it, you can do another W-4 and have them withhold an additional amount on top of what they withhold from the table. If you do have any extra money now you could also go ahead and make an estimate to help cushion the blow on April 25. My advice would be to go to a reputable tax professional now, before the year is over and he/she can review your options with you in detail. If you can't afford to pay for the advice, a lot of cities and universities have low cost tax clinics that can help you. If you are a university student now, check the law school or business school. If you can't find one, you can probably figure all this out yourself on the IRS website. The IRS also has a group called Taxpayer Assistance that answers questions over the phone but be warned that if they tell you the wrong thing, you'll still be subject to any penalties you are assessed from relying on their advice.

Answer 4

Relax, you will not go to jail for paying too little via your w-4. If your income is substantially larger than what you anticipated, you can always pay quarterly income tax. The amount in question is relatively small and will, at the worst , give you a small penalty tax when you do pay. However, based on the attached IRS link, if you are planning on making $6000, the correct claim is "0" on your w-4. Your decision to change the w-4 last month was a good one. The worst case now is you might owe a little when you file your 2007 taxes.

Answer 5

Your W-4's are not a binding document, they are a way for you to tell your employer what you think you will need deducted for the year. What you are doing, in essence, is asking the government to open a savings account to hold money for you, so that you don't have to pay a big chunk next April. What you need to think about is will the money they deduct till the end of the year cover the money they did not take out the first part. You say you first signed your W-4 in March. Does that mean you only worked March, April and June on that form? Three months w/ no deductions might not be that bad. You may even still get money back, depending on how few deductions you took on the new form.

Answer 6

No you will not go to jail...all that will happen is at the end of the year when you do your taxes you will owe them money. Nothing bad happens…IE No recorded…….. unless you do not pay them when you file taxes at the end of the year.

If you want you can option for the IRS to take a additional amount out each pay period like $10.....but if it was me I would just wait until the end of the year and when I file my taxes pay them what I owe then....It should not be very much.

Answer 7

Some of these "answers" are terrible...

First off, don't worry..you're not in any legal trouble. Basically, you didn't withhold federal and state taxes early in the year...so now you have to play catch-up (so you don't have to pay a big number when you file your tax return).

You can calculate this by using last years tax return and estimating what it will be this year. If that's not your cup of tea, call your local accounting firm. They'll be able to help you out as well.

My advice is to figure out what you'll owe now and start making adjustments to make up for the amount of money you didn't withhold. You can talk to the payroll dept where you work and have them adjust your withholding from now on or set aside money yourself from every paycheck. I would personally try to have it done for me because, well, when I get money I spend it on junk.

To sum it up:

Don't Panic!
Figure out how much you should've withheld (fed & state)
Withhold that amount + normal amount
Enjoy the rest of the year.

Answer 8

Have your job take out extra in your taxes for the remainder of the year.
More than likely, you'll just have to pay in the money that you owe when tax time rolls around- so put some into savings each week and plan for it.
You can also contact the IRS for a more "professional" opinion, but I'm sure you don't have to worry about doing any jail time- especially since you're trying to resolve your mistake!
Don't panic! You'll be fine!

Answer 9

No, no, no. Don't worry too much. When you calculate your taxes at the end of the year it will show up that you owe the IRS money, and you just send them in a check, the same way they send you a check back if they took out too much money. You're fine. if you ever do screw up your taxes don't worry about it, just explain your situation to the IRS and if you're unlucky they MIGHT fine you a bit. They don't clamp down their iron fist on everybody and their moms for tax evasion though; that's only in the movies.

Answer 10

You're fine hun. Most people don't end up paying enough into their taxes. You just pay what you owe when you get your taxes done. They even can do payment plans. You won't owe much, if anything. You really didn't make enough to be taxed much. When I was in college just a couple years ago, I only made about $13000 that year, and paid about $200 in federal taxes. Don't worry. You're ok.