If I file exempt in the begining of the year but I am able to prove all my tax rights-offs, deductions, contridutions and investments come next tax time, will I be ok?
2007-12-29 19:14:19 · 4 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ United States
If you can't file exempt and still want no tax withheld from your paycheck, you can claim 9 or more allowances on your W-4. However, you may need to provide proof to your employer to do this.
2007-12-30 01:46:24 · answer #1 · answered by Steve 6 · 0⤊ 1⤋
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RE:
filing exempt?
If I file exempt in the begining of the year but I am able to prove all my tax rights-offs, deductions, contridutions and investments come next tax time, will I be ok?
2015-08-07 22:47:23 · answer #2 · answered by Anonymous · 0⤊ 0⤋
There are 2 tests that you must meet to claim EXEMPT from withholding. When you sign a Form W-4 you are swearing under penalty of perjury that it is correct.
1. You must have had $0 tax liability for the prior tax year and received a refund of ALL income taxes withheld.
2. You reasonably expect to have $0 tax liability for the current tax year.
If you don't meet BOTH of those tests you may NOT claim EXEMPT on Form W-4.
Additionally if you can be claimed as a dependent by another taxpayer you cannot file EXEMPT if you have more than $850 in income that includes $300 or more of unearned income such as dividends and interest.
Merely being able to prove your deductions, etc does not entitle you to claim EXEMPT. Everyone has to be able to prove what they claim on their tax return regardless of their tax liability.
If you claim EXEMPT and it turns out that you actually owe tax you may be subject to a range of penalties and adverse actions from the IRS. They can levy penalties and interest for underpayment of taxes. They can levy an additional $500 penalty for filing a false declaration on Form W-4. They can also issue a Lock Letter to your employer directing your employer to withhold tax at a level specified by the IRS regardless of what you claim on your W-4. In virtually all cases that means Single and 0.
2007-12-29 19:39:43 · answer #3 · answered by Bostonian In MO 7 · 0⤊ 1⤋
You should only file exempt if you had no tax liability for 2007 or for 2008. Exempt was designed for low income earners such as students working a few weeks of the year.
2007-12-30 08:34:28 · answer #4 · answered by Gary 5 · 0⤊ 1⤋
If you do in fact expect to owe $0 in taxes, then you can file exempt.
2007-12-29 19:23:06 · answer #5 · answered by Anonymous · 1⤊ 0⤋