people at work all filing exempt for taxes?

Question

okay well this one lady at work is telling people to claim exempt cuz she got more money back, so now alot of people are joining her bandwagon, they all want to more money during income tax season, but i know its not that simple, im not too familar with taxes, but i know something is not right. im not gonna file exempt but some of my friends believe that lady, and i kinda think its not gonna work. so im not sure whats right or not. if anyone can help, i would appreciate it. =) thanks, and if you dont understand what im trying to say...well i dnot understand either. lol

Answer 1

You are free to claim an exempt status. You typically will get more from your paycheck because nothing is being held out for taxes. As you rightly suspect, the piper must be paid one way or another. If you are the type of person who is able to save the money needed to pay your taxes at the end of the year, this may be something you might want to consider. Most people, howerver, are not that disciplined. And, and this is a biggie, the IRS doesn't like it when people do this. If you owe too much at the end of the year, you could be slapped with a penalty. Follow your gut instinct. It's really not worth it in the end.

Answer 2

While a person can check a block on Form W-4 which says they are exempt from withholding, if you read the form instructions you will see that it applies to very few people. It sounds like the woman at work thinks that exempt from withholding means being exempt from taxes; that is incorrect.

If they make more than the the amount at which they must file, they must still file a tax return and pay any tax due. What they claimed on a W-4 does not change that. With no taxes withheld, they may have a large balance due.

Before making changes to their withholdings, your coworkers should do the computations on the W-4. Otherwise they could have a serious underpayment.

Answer 3

Filing Exempt

Answer 4

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Some answers have noted that claiming exempt on your W-4 does not mean you don't have to file and pay taxes. That is technically correct, but if you earn enough to be required to file a tax return (and you do), you can't legally claim exempt. Claiming exempt IS claiming your will have ZERO tax liability.

Answer 5

At some point the IRS will notice. The IRS will send the employer a Lock-In letter saying from now on this person can only file as single-1 or single-0.

Read the W-4 form. "Exempt" can only be elected in a limited number of sitatutions (no tax last year, no tax expected this year).

Answer 6

Tell them to read the instructions at the top of Form W-4. Remind them that they are swearing under penalty of perjury that the Form W-4 is true and accurate. Filing a false exempt claim can subject those folks to a $500 administrative penalty from the IRS. It can also lead to a Lock Letter from the IRS which normally freezes their withholdings at Single and zero regardless of what they file on their W-4 or would otherwise be entitled to.

Answer 7

What you file on your W-4 means nothing to your taxes. It only changes the amount withheld in advance of April 15th. The real goal is to owe a little bit as long as you are prepared for owing and set aside money to pay it.

It's possible that the woman who has anointed herself as the office tax guru is married and her husband has enough withheld to cover everything. Another possibility is that she doesn't make much and has children or deductible expenses (mortgage interest, real estate taxes, etc.) that lower her taxable income to zero. There are many other possible scenarios. (Too many for me to type at my blazing 30 words per minute.)

Answer 8

Exempt On Taxes

Answer 9

You do kind of ramble on don't you?
If they are claiming exempt from taxes, then when it comes time to pay, they are going to have to come up with a sh!t-load of money to pay those taxes that weren't withheld from their paycheck! Don't do it!

Answer 10

Hope this helps!