Filing exempt?

Question

I fild exempt all year long. I am a single mother of two. I was told the other day I cant file exempt all year long. I was also told I am gonna have to pay. I sthis true?

Answer 1

Very possibly! If you have ANY tax liability at all for 2007, a claim of EXEMPT from withholding was improper. Without knowing the numbers, it's not possible to say how much you might owe.

You should have read the instructions printed directly on the Form W-4 that you signed. If you had done that and followed the instructions you would not have improperly claimed EXEMPT if you're not entitled to it.

Answer 2

Claiming exempt is something that's done on a W-4 that you file with your employer. It doesn't mean that you are exempted from paying tax, just that the employer wouldn't withhold income taxes from your paychecks, so you'd have to pay it all at the end. You are not legally entitled to claim exempt on your W-4, since you are only allowed to do that if you do not expect to owe any tax for the year, and you will have tax liability. If you claim exempt anyway, you'll have to pay the whole amount at the end of the year, plus penalties for underwithholding and possible additional penalties for illegally filing a W-4 as exempt. Yes, you'd still get your W-2 early the next year, showing your income for the year and zero as federal taxes withheld. Repeat - this does NOT exempt you from paying tax. All you do is cause trouble and extra expense for yourself.

Answer 3

Exempt is for low-income earners who did not have a tax liability last year and do not expect a tax liability for this year. So if you end up paying taxes then you better correct your W4 form at work. You can always change your W4 form at any time. Also, if you pay more than $1,000 when you file your 2007 taxes then you will pay a penalty as well. You need to see your payroll clerk regarding your W4 form. If you have state taxes then correct the state's W4 form as well. Your payroll clerk did not do a very good job in the first place. He or she should of question you about being "exempt" all year long.

Answer 4

Whether you have to pay anything, and whether you are allowed to file exempt, depends on your income and a few other things. Did you make about the same last year, and not owe anything or get a refund? Then you're probably OK. Did you have any tax liability last year? Then you are NOT allowed to file exempt and are likely to owe something.

If your situation last year was very different from this year so you can't tell from that: as a single mother of two, if you claim both of the kids as dependents and they're both under 17 so you get a child tax credit for them, then if your income is under around $30,000 for the year or maybe even higher, you aren't likely to owe anything. But if you had ANY tax liability for last year, you are not technically allowed to file as exempt this year even if you don't expect to owe anything this year.

Answer 5

If you are a single mom, you should always claim at least one for yourself and one for each of your children if you can claim them as a dependent on your taxes. If you file exempt, then you may not have paid enough taxes during the year so on your tax return, you might have to pay instead of getting money back.