Is it wrong to claim more than you actually have to get more money on your paycheck each week?

Question

I've never done it but many people I know do. Some claim single and 3 but don't even have kids. What are the pros and cons of this? Is this legal?

Answer 1

Yes, you can claim more on your W-4.

I'm single with no dependents. I claim Single with 5 exemptions. I'll come close to breaking even at tax time.

Also, I've claimed as many as 10 exemptions during my life. I've never owed more than $200 to the IRS in any given year because I plan appropriately.

Answer 2

Totally legal like other people have said. Also their pros and cons are correct. One other thing to consider is that if you are disciplined, it is actually better to get more money back in your paycheck instead of having it go to the IRS and waiting for a refund. The extra money that the IRS refunds to you is kept by them for the entire year and used by them to earn interest. If you keep the extra money, you can put it into an interest earning account and have that money at your disposal. That said, this only works if you are very disciplined. Otherwise, you just end up owing the IRS the money at tax time and you have no way of paying it. For the average person, I would not recommend this route.

Answer 3

Yes it's legal to claim more dependents on your w-4 but when you do your taxes at the end of the year you can only claim your actual true dependants. One of the cons of doing this is that you may actually end up owing money at the end of the year rather than getting a refund.

Answer 4

Yes, it's absolutely legal. When you fill out the W-4, you are not saying that you have kids - you are just instructing your payroll people to withhold at a certain rate.

The pros=more money in each paycheck. The cons=a lower refund (or taxes due) come April 15.

Answer 5

Yes its legal and a very popular idea.

If you know you will get back a large tax refund every year and your finanacial situation does not change then why have the government earn interest on your money?

By claiming more dependents you get more in your paycheck NOW rather than getting a larger tax refund LATER.

Answer 6

There is a line above the signature on your W-4 saying that by signing, you're saying under penalty of perjury that all entries on the form are correct.

That said, allowances on a W-4 aren't just for exemptions, they can also be legal if you have adjustments or if you itemize, and one extra allowance is OK if you only have one job. So just because someone claims single/3 and doesn't have kids doesn't necessarily mean they are doing something illegal.

Answer 7

Technically, the information you fill out on the W-4 form (for withholding) must be "true, correct and complete". Otherwise, providing false information to get more money in your paycheck appears to open you up to perjury. Look at the form here http://www.irs.gov/pub/irs-pdf/fw4.pdf?portlet=3.

Notice the warning where your signature goes....

Also, see Federal Law

11.01 STATUTORY LANGUAGE: 26 U.S.C. § 7205(a)

§7205. Fraudulent withholding exemption certificate
or failure to supply information

(a) Withholding on wages. -- Any individual required
to supply information to his employer under section 3402 who willfully
supplies false or fraudulent information, or who willfully fails to supply
information thereunder which would require an increase in the tax to be
withheld under section 3402, shall, in addition to any other penalty
provided by law, upon conviction thereof, be fined* not more than $1,000,
or imprisoned not more than 1 year, or both. [FN1]

*As to offenses committed after December 31, 1984, the Criminal Fine
Enforcement Act of 1984 (P.L. 98-596) enacted 18 U.S.C. § 3623 [FN2]
which increased the maximum permissible fines for both misdemeanors and
felonies. For the misdemeanor offenses set forth in section 7205, the
maximum permissible fine for offenses committed after December 31, 1984,
is at least $100,000 for individuals. Alternatively, if the offense has
resulted in pecuniary gain to the defendant or pecuniary loss to another
person, the defendant may be fined not more than the greater of twice the
gross gain or twice the gross loss.

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11.02 GENERALLY

Section 7205(a) is directed at employees who attempt to thwart the income
tax wage withholding system by submitting false Forms W-4 or W-4E (hereinafter
referred to as Forms W-4) to their employers. [FN3] Until the above-noted (n.1,
supra) statutory amendment in 1984, section 7205 had been one of the
government's only prosecutorial weapons in combating employees' attempts to pay
no taxes and to remove themselves from the federal income tax system. In the
first instance, the employee, often a tax protestor, submits a false employee
withholding certificate (Form W-4) to an employer, claiming either an excessive
number of withholding allowances or, more typically, an exemption from
withholding, based on a claim of having incurred no tax liability in the previous
year and anticipating no tax liability in the present year. The result is the
prevention of periodic tax withholding on wages throughout the year.
Subsequently, when an income tax return is due, the employee fails to file a
return.

Prior to the 1984 statutory change, the government's prosecutive approaches
to the furnishing of false Forms W-4 included: (1) charging the supplying to an
employer of a false or fraudulent Form W-4 as a violation of 26 U.S.C.
§ 7205; (2) charging in one count the supplying of a false Form W-4, in
violation of 26 U.S.C. § 7205, and, in a second count, charging a failure
to file an income tax return, in violation of 26 U.S.C. § 7203; or
(3) charging only the section 7203 offense, where no income tax return was filed,
and using the filing of the false Form(s) W-4 as evidence of willfulness.

Since the 1984 statutory change, the government now typically charges the
filing of a false Form W-4 as an affirmative act in a Spies-evasion
felony prosecution rather than bringing the misdemeanor 7205 charge. See
United States v. King, 126 F.3d 987 (7th Cir. 1997); United
States v. Connor, 898 F.2d 942 (3rd Cir. 1990); United States v.
Foster, 789 F.2d 457, 460-61 n.4 (7th Cir. 1986) (explaining why,
following statutory changes, the government was no longer limited to charging the
filing of a false Form W-4 as a violation of section 7205, as some courts had
suggested). See Section 8.04[01], supra, dealing, among other
things, with Spies-evasion and false Forms W-4, and Section
40.04[01], infra, Tax Protestors. However, in appropriate
cases, section 7205 charges are still available. See
Foster, 789 F.2d at 460-61 (charging section 7201 and 7205
violations); United States v. Copeland, 786 F.2d 768, 770-71
(7th Cir. 1986) (same).