I have a $10,000 check coming my way in and don't want to have taxes withheld--what do I check off on the W-9?

Question

I want the full 10k and the company is asking for a W-9 to be filled out. Do I just enter name, ss#, address and not check off the 'exempt' and 'individual' boxes on the W-9 form? thanks

This is a one time 10k check that the company is giving me the choice of withholding or not withholding the taxes. I choose to not have them withhold the taxes. Being a salesman and having my yearly right offs, mortgage interest, etc. I feel the offset of the tax due on this 10k will be worth my keeping the full 10k.

Answer 1

OK, first of all, is the company asking for a W9, or a W4? A W9 is a request for a Taxpayer Identification Number, which would indicate that you do not have a Social Security Number, and can't get one for some reason. This can also be used for someone who is self-employed, but then the company typically wouldn't take taxes out anyway.
I really can't fully answer your question without knowing the source of the income. Is this self-employment, employment, interest, stock, bonus from employment, or something entirely different? That kind of information would help here.
A W4 is an Employee's Withholding Allowance Certificate, which helps the employer to withhold income taxes correctly.

You cannot mark the "exempt" box unless you meet two requirements. First, you cannot have had a tax liability last year. This means that you got everything back that had been withheld, and did not owe anything (basically). Second, you expect not to have a tax liability for this year, meaning that you expect to earn less than your standard deduction plus any exemptions you are entitled to claim. If you do not meet these two tests, it is illegal for you to check the "exempt" box.
You can try to "cheat" the system legally by claiming 15 exemptions, which will allow for very little, if any, tax to be withheld. But beware, you could wind up with a balance due when you file your return, and the IRS gets a little testy when you don't pay them on time. If it is taxable income, the IRS wants their money within the quarter that you earn it, not at the end of the year, so you may need to make a quarterly payment if you don't have enough withheld.
If you give more details, I might be able to better answer the question. But that's a broad overview of what you need to consider.

Answer 2

There is a lot of bad info here and a critical question that none of the experts have asked yet. So I'll ask it: Is this money being paid to you by your employer? If the answer is "Yes" then there are no options. This is treated as an irregular or bonus payment to an employee and Federal income tax MUST be withheld at the statutory rate of 25%. Your state may also have a mandatory withholding rate for irregular payments and it will apply. Also, Social Security and Medicare will be withheld at the usual rates.

About the only way that you could legally avoid having taxes withheld on this payment would be if the payment was for tangible personal or real property you sold to your employer. Unless that's the case, withholding at the statutory rate is mandatory and you'll both be in violation of the law if taxes are not properly withheld.

Answer 3

You said "W-9". If it is a W-9:
1. Enter your name.
2. Check the box for "Individual/Sole proprietor"
3. Enter your address.
4. Enter your SSN.
5. Sign the form.

This is all you have to do. There is no "exempt" box on a W-9 (exempt payee means something else). Nothing is withheld from a payment for which a properly completed W-9 applies unless you are required to cross out the text in Part II, item 2, relating to backup withholding, and do so.

Answer 4

On a W-9 they won't withhold taxes, but don't just go and spend it all, since you'll have to pay tax on it at the end of the year. Your best bet would be to file an estimated return and pay in the expected tax on the amount rather than waiting until you file, having to come up with a lot of money, and maybe owing a penalty for underwithholding in addition to the tax.

The company will be giving you a 1099 at the end of the year, and reporting the payment to the IRS.

Answer 5

This is just a tax identification number certification form and doesn't have anything to do with withholding taxes (you certify it's your SSN so they can report your income to the IRS).

You check "individual". You do not check exempt from backup because it has nothing to do with the check you are about to receive - unless you owe the IRS money. If you owe them money, you must meet the following conditions:

I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (IRS) that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding.

The W-4 form is the form you can enter your level of withholding (via exemptions). If you claim more than 9 allowances, your employer may be required to send your W-4 to the IRS for review.

You are exempt from income tax withholding only if your income for the year will be less than $800. If you are exempt, skip lines 5 and 6, and write "EXEMPT" on line 7.

If they are not asking for a W-4 form, they are not withholding and YOU are responsible for paying the taxes as they will no doubt issue you a 1099.

Answer 6

Unfortunately you do not have a choice on whether you will pay taxes on the check right away or later. You will HAVE to pay them regardless. If the company giving the check wants to give you a W-2 for the cash then taxes will be taken out. You can ask them to send you a 1099 for the check instead of a W-2. This just means you will pay taxes at the end of the year instead of now.

Answer 7

you should not check off exempt cause on w9, that's reserved for corporations and similar (as opposed to a different meaning on w-4).
since you are an individual as opposed to a corp, you should check the box for indiv.

By signing the w9 youre saying that youre not subject to withholding and therefore the company wont withhold anything but you will be responsible on your own for paying any tax.. If you don't fill out the w9 however, then they are required to withhold.

Answer 8

You must fill out the W-9 form and you have the right not to have the taxes withheld BUT you will have to pay the taxes on this money when it comes time to file in April. You cannot avoid the taxes on this money unless you want to risk a long term prison sentence. It actually is a better move to have them take the taxes out before you get the money because you will have to pay them and if you have spent the money you will have to come out of pocket to pay the taxes on top of whatever other income and other taxes that you might have to pay.

Answer 9

check off the box that indicates NO TAX TO BE WITHHELD. Tax withholding on such payments is OPTIONAL. DO NOT check exempt because that would be fraudulent. Your human resources department can help you with questions regarding the form they need.

Answer 10

Make sure you put 25% away in a savings account to pay the IRS before next quarter - or you could get some serious penalties when you file.