Is there any law stating i have to have taxes taken from checks and i cant pay it all at the end of the year?

Question

i'd like to be able to pay my taxes to my savings account each check and collect the interest myself, and just make a huge payment at the end of the year. but im unable to find an answer to this question anywhere. thanks.

Answer 1

No, you cannot do that. Income taxes are actually due when the money is earned, NOT at filing time. If your tax bill at filing time is over $1,000 (not $50 as stated by another poster) you may be subject to penalties and interest for underpayment of taxes. For that reason, the guidance to claim an excessive number of withholding allowances is poor practice. That can also lead to a Lock Letter from the IRS, forcing your employer to withhold taxes at a level determined by the IRS, usually Single and 0 regardless of what you would otherwise be entitled to.

Answer 2

Yes, there is a Federal law that came into being in the 1950s stating that the Employers MUST withhold from Statutory Employees the FICA, the IRS and any state income taxes. Previously, the income tax was an annual payment, but it exempted many workers. Most workers are defined as Statutory Employees.

About all you can do is claim 2 dependents at the start of the tax year, change that to 1 dependent to claim withholding at the end of May -- your refund will be much smaller. There is a added tax penalty if your withholdings are more than $50 short of paying the total amount of taxes owed.

Otherwise, you need to be a Contract Worker and those taxpayers write a check every quarter, based on the prior year's income.

Answer 3

As an employee, you don't have a choice. You must have money deducted to pay your social security tax, state, and local taxes. However, you can lower the amount deducted by declaring a high number of dependents on your tax witholding form.

If you're single, write down you're declaring 6 (or more) dependents. This will lower the money deducted from your state and federal income witholding tax, but will result in you owing the state and federal government $$ which were not witheld enough through out the year. You must exercise strict dicipline in putting away at least 10% of your net income to a saving account, so that you may have money available to pay, when its time to file your tax reports.