Can I claim exempt on any taxes in order to gain interest on money saved for tax payment come April of 2008?

Question

22 years old
salary above 60k
home owner
401k disbursements

Answer 1

No you cannot. Taxes are due when the income is received, not on April 15th.

Claiming exempt at that income level is asking for trouble. Although employers are no longer required to automatically provide copies of Form W-4 claiming exempt status or over 10 allowances to the IRS, the IRS is likely to question the exempt status when the first payroll return is filed by your employer showing that high of an income and $0 withholding. There is a $500 penalty for filing a fraudulent Form W-4 and claiming exempt when you are not IS fraudulent.

When the IRS catches a fraudulent Form W-4 filing they virtually always order the employer to withhold taxes as if the taxpayer filed a Form W-4 claiming Single and 0 allowances, regardless of what the taxpayer would otherwise be entitled to claim. This usually results in over-withholding.

On top of that, you would almost certainly owe more than $1,000 when you filed so you would be subject to penalties and interest for underpayment of taxes.

What little you might gain in interest during the year would be wiped out (and then some) by the various penalties levied by the IRS.

Answer 2

You can't legally do this unless you do not expect to owe any tax for the year, and didn't owe any the previous year. Look at the line on the W-4 above the signature where it says you state under penalty of perjury that all the information on the form is correct. You can be fined for falsely claiming "exempt".

And just from a practical standpoint, if you are going to owe $1000 or more in taxes for the year, you'll also owe penalties for underwithholding when you file, which would probably more than wipe out any interest you'd get.

Answer 3

You can claim tax exemption if you are head of the family and has beneficiary in you custody. Exemption is f ix based on BIR regulation.