Question about going tax exempt on mulitple pay periods

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  • agthorn
    agthorn Posts: 1,844 Member
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    If it is just the standard payroll taxes you will be ok as long as your entire tax obligation is paid by April 15. They don't care when you pay them, just that you pay them by the 15th.

    This is absolutely not true. There can be penalties for under withholding. http://www.ehow.com/facts_5855417_penalty-underwithholding-taxes_.html

    Moral of the story - get your tax advice from a tax advisor, not a weight-loss site.

    This would not effect the OP though.
    Maybe, maybe not. I'm not a tax advisor so I can't tell OP what's best for their situation. I can tell OP that there is a lot of factually incorrect information in this thread, as several people have repeated the "you're okay as long as you pay by April 15th" statement. I wouldn't go to H&R block with questions about dieting, and I wouldn't come to MFP for tax advice.
  • WendyTerry420
    WendyTerry420 Posts: 13,274 Member
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    Hello,
    At my job, I usually go tax exempt twice a year (I want money now and just take it off for tax time), but this year I did it 4-5 times. Can I get in any legal trouble for doing it 4-5 times a year? I usually get pretty nice refunds even for going tax exempt twice a year.

    Thanks

    No, you could actually *legally* claim exempt all year. It isn't advisable though because then you end up with a big bill on 4/15!

    This is not true - if you do not have enough withheld to cover your tax liability for the year, you may owe penalties. For example, those subject to the AMT (alternative minimum tax) have to make quarterly estimated payments for the amount by which they will be underwithheld for the year in order to avoid penalties.

    Also...depending upon how manual the system is (if you or they are doing the data entry), you are not making friends in your payroll department.

    The bolded part is the crux of the matter. If you *normally* get a refund, and *normally* have zero liability, or only a small liability, then withholdings only increase your refund. For example, if I didn't claim exempt on my W-4, then the tax refund would be close to $20k.
  • TylerJ76
    TylerJ76 Posts: 4,375 Member
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    TAX advice on MFP....


    Awesome..
  • WendyTerry420
    WendyTerry420 Posts: 13,274 Member
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    If it is just the standard payroll taxes you will be ok as long as your entire tax obligation is paid by April 15. They don't care when you pay them, just that you pay them by the 15th.

    This is absolutely not true. There can be penalties for under withholding. http://www.ehow.com/facts_5855417_penalty-underwithholding-taxes_.html

    Moral of the story - get your tax advice from a tax advisor, not a weight-loss site.

    This would not effect the OP though.
    Maybe, maybe not. I'm not a tax advisor so I can't tell OP what's best for their situation. I can tell OP that there is a lot of factually incorrect information in this thread, as several people have repeated the "you're okay as long as you pay by April 15th" statement. I wouldn't go to H&R block with questions about dieting, and I wouldn't come to MFP for tax advice.

    I'm basing it on OP's reference to occasional OT and the statement, " I usually get pretty nice refunds."
  • Espressocycle
    Espressocycle Posts: 2,245 Member
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    Only if you fell behind enough to have needed to make installments, in which case you will have a fine.
  • agthorn
    agthorn Posts: 1,844 Member
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    If it is just the standard payroll taxes you will be ok as long as your entire tax obligation is paid by April 15. They don't care when you pay them, just that you pay them by the 15th.

    This is absolutely not true. There can be penalties for under withholding. http://www.ehow.com/facts_5855417_penalty-underwithholding-taxes_.html

    Moral of the story - get your tax advice from a tax advisor, not a weight-loss site.

    This would not effect the OP though.
    Maybe, maybe not. I'm not a tax advisor so I can't tell OP what's best for their situation. I can tell OP that there is a lot of factually incorrect information in this thread, as several people have repeated the "you're okay as long as you pay by April 15th" statement. I wouldn't go to H&R block with questions about dieting, and I wouldn't come to MFP for tax advice.

    I'm basing it on OP's reference to occasional OT and the statement, " I usually get pretty nice refunds."
    Yes, and now they have a different situation, so unless you're looking at their numbers you don't know how it has affected their overall tax situation, and people telling them that they'll be fine as long as they pay the full balance by April 15th have no idea if that's true or not.
  • WendyTerry420
    WendyTerry420 Posts: 13,274 Member
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    If it is just the standard payroll taxes you will be ok as long as your entire tax obligation is paid by April 15. They don't care when you pay them, just that you pay them by the 15th.

    This is absolutely not true. There can be penalties for under withholding. http://www.ehow.com/facts_5855417_penalty-underwithholding-taxes_.html

    Moral of the story - get your tax advice from a tax advisor, not a weight-loss site.

    This would not effect the OP though.
    Maybe, maybe not. I'm not a tax advisor so I can't tell OP what's best for their situation. I can tell OP that there is a lot of factually incorrect information in this thread, as several people have repeated the "you're okay as long as you pay by April 15th" statement. I wouldn't go to H&R block with questions about dieting, and I wouldn't come to MFP for tax advice.

    I'm basing it on OP's reference to occasional OT and the statement, " I usually get pretty nice refunds."
    Yes, and now they have a different situation, so unless you're looking at their numbers you don't know how it has affected their overall tax situation, and people telling them that they'll be fine as long as they pay the full balance by April 15th have no idea if that's true or not.

    It sounds like the difference is simply a little more OT. Unless it came with a big pay raise, it takes more than a few weeks on OT to change your refund from "pretty nice" to nil.
  • agthorn
    agthorn Posts: 1,844 Member
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    If it is just the standard payroll taxes you will be ok as long as your entire tax obligation is paid by April 15. They don't care when you pay them, just that you pay them by the 15th.

    This is absolutely not true. There can be penalties for under withholding. http://www.ehow.com/facts_5855417_penalty-underwithholding-taxes_.html

    Moral of the story - get your tax advice from a tax advisor, not a weight-loss site.

    This would not effect the OP though.
    Maybe, maybe not. I'm not a tax advisor so I can't tell OP what's best for their situation. I can tell OP that there is a lot of factually incorrect information in this thread, as several people have repeated the "you're okay as long as you pay by April 15th" statement. I wouldn't go to H&R block with questions about dieting, and I wouldn't come to MFP for tax advice.

    I'm basing it on OP's reference to occasional OT and the statement, " I usually get pretty nice refunds."
    Yes, and now they have a different situation, so unless you're looking at their numbers you don't know how it has affected their overall tax situation, and people telling them that they'll be fine as long as they pay the full balance by April 15th have no idea if that's true or not.

    It sounds like the difference is simply a little more OT. Unless it came with a big pay raise, it takes more than a few weeks on OT to change your refund from "pretty nice" to nil.
    Everything you've just said is pure guessing. I'm certainly not going to base my tax strategy on bad information and strangers guessing at my financial information, and neither should OP. I'm surprised that you're still arguing with me about this.
  • WendyTerry420
    WendyTerry420 Posts: 13,274 Member
    Options
    If it is just the standard payroll taxes you will be ok as long as your entire tax obligation is paid by April 15. They don't care when you pay them, just that you pay them by the 15th.

    This is absolutely not true. There can be penalties for under withholding. http://www.ehow.com/facts_5855417_penalty-underwithholding-taxes_.html

    Moral of the story - get your tax advice from a tax advisor, not a weight-loss site.

    This would not effect the OP though.
    Maybe, maybe not. I'm not a tax advisor so I can't tell OP what's best for their situation. I can tell OP that there is a lot of factually incorrect information in this thread, as several people have repeated the "you're okay as long as you pay by April 15th" statement. I wouldn't go to H&R block with questions about dieting, and I wouldn't come to MFP for tax advice.

    I'm basing it on OP's reference to occasional OT and the statement, " I usually get pretty nice refunds."
    Yes, and now they have a different situation, so unless you're looking at their numbers you don't know how it has affected their overall tax situation, and people telling them that they'll be fine as long as they pay the full balance by April 15th have no idea if that's true or not.

    It sounds like the difference is simply a little more OT. Unless it came with a big pay raise, it takes more than a few weeks on OT to change your refund from "pretty nice" to nil.
    Everything you've just said is pure guessing. I'm certainly not going to base my tax strategy on bad information and strangers guessing at my financial information, and neither should OP. I'm surprised that you're still arguing with me about this.

    No, it's based on knowledge of the tax code.
  • corn63
    corn63 Posts: 1,580 Member
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    OP in one year: the IRS put a lien on my house. They said I owed back taxes! The people on MFP said I'd be okay!


    Oi. Lots of people here are knowledgeable in many things, but I'd go to the professionals for this one. Especially one I can look at in the face and see their credentials on the wall.


    My personal agenda that has nothing to do with this thread: If you end up not having a refund, that's awesome. Why give the government a tax free loan of your money that YOU earned? I don't understand wanting a refund. The smaller the refund, the less money the government has a hand in your finances.
  • TylerJ76
    TylerJ76 Posts: 4,375 Member
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    My personal agenda that has nothing to do with this thread: If you end up not having a refund, that's awesome. Why give the government a tax free loan of your money that YOU earned? I don't understand wanting a refund. The smaller the refund, the less money the government has a hand in your finances.

    Because I WANT THE BIG CHECK!

    Don't judge me..
  • agthorn
    agthorn Posts: 1,844 Member
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    OP in one year: the IRS put a lien on my house. They said I owed back taxes! The people on MFP said I'd be okay!
    Haha, and meanwhile the guy at H&R Block told me all I had to do was drink these meal replacement shakes his cousin sells, so how come I'm not losing weight?!?
  • corn63
    corn63 Posts: 1,580 Member
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    OP in one year: the IRS put a lien on my house. They said I owed back taxes! The people on MFP said I'd be okay!
    Haha, and meanwhile the guy at H&R Block told me all I had to do was drink these meal replacement shakes his cousin sells, so how come I'm not losing weight?!?

    He told me to drink water and lift heavy! Jerk.
  • agthorn
    agthorn Posts: 1,844 Member
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    Everything you've just said is pure guessing. I'm certainly not going to base my tax strategy on bad information and strangers guessing at my financial information, and neither should OP. I'm surprised that you're still arguing with me about this.

    No, it's based on knowledge of the tax code.
    Which is only half of the equation. How the tax code applies to an individual person's situation is the other half. Tax codes are not like laws of nature...
  • WendyTerry420
    WendyTerry420 Posts: 13,274 Member
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    My personal agenda that has nothing to do with this thread: If you end up not having a refund, that's awesome. Why give the government a tax free loan of your money that YOU earned? I don't understand wanting a refund. The smaller the refund, the less money the government has a hand in your finances.

    Because I WANT THE BIG CHECK!

    Don't judge me..

    Can't judge you for that! :laugh:

    I hate the idea of giving the government an interest-free loan!
  • WendyTerry420
    WendyTerry420 Posts: 13,274 Member
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    Everything you've just said is pure guessing. I'm certainly not going to base my tax strategy on bad information and strangers guessing at my financial information, and neither should OP. I'm surprised that you're still arguing with me about this.

    No, it's based on knowledge of the tax code.
    Which is only half of the equation. How the tax code applies to an individual person's situation is the other half. Tax codes are not like laws of nature...

    True, but the OP's situation is similar to my own and many other people that I know that do the exact same thing. I currently work in the tax industry, majored in accounting, including tax classes. It boils down to what Tyler said: do you want a big check at tax time or a smaller one? If I chose, I could do 4 exemptions and get $20k at tax time. Instead, I claim exempt and get 2/3 of that spread out through the year and only have to wait for about $6k of it. (I miss the W-5! :sad:) If I didn't claim exempt on my W-4, then I would change my payroll during peak season when I get lots of OT because during the weeks of OT, the withholding is way too large.
  • jofjltncb6
    jofjltncb6 Posts: 34,415 Member
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    TAX advice on MFP....


    Awesome..

    ^this

    I'm a CPA...

    ...and this will be my only post on this thread. (Admittedly, my field of expertise is corporate/partnership and not individuals.)

    OP, if you don't have a CPA friend, make one. Meanwhile, consider finding a forum (like intuit.com/turbotax.com) to post your question where they will give you both the technical and the practical answers to your question. (Hint: the usual outcome in a situation like this is very different than the technically possible outcome.)

    The forums here are sketchy enough with the diet and exercise advice generated. I have no idea why you would expect sound tax/legal advice here.


    Great job with your efforts not to get in trouble with the IRS!! I wish you nothing but success in all your fitness and health goals. :flowerforyou: *

    *(c) DrMerc 2012. All rights reserved. Use of this phrase without express permission of DrMerc is prohibited. (PS: DrMerc is remarkably encouraging and supportive. You should send him a PM and a FR. You're welcome.)
  • Alex_is_Hawks
    Alex_is_Hawks Posts: 3,499 Member
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    In Canada, whether you pay yourself now or later doesn't matter....as long as you are honest about it at filing time and as long as you are prepared for the monetary outcome (ie....breaking even or owing)
  • agthorn
    agthorn Posts: 1,844 Member
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    I'm a CPA...

    ...and this will be my only post on this thread. (Admittedly, my field of expertise is corporate/partnership and not individuals.)

    OP, if you don't have a CPA friend, make one. Meanwhile, consider finding a forum (like intuit.com/turbotax.com) to post your question where they will give you both the technical and the practical answers to your question. (Hint: the usual outcome in a situation like this is very different than the technically possible outcome.)

    The forums here are sketchy enough with the diet and exercise advice generated. I have no idea why you would expect sound tax/legal advice here.
    THANK YOU.
  • neverstray
    neverstray Posts: 3,845 Member
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    In Canada, whether you pay yourself now or later doesn't matter....as long as you are honest about it at filing time and as long as you are prepared for the monetary outcome (ie....breaking even or owing)

    And who determines if you're honest?

    The USA is not like any other civilized 1st world country. The IRS will literally bankrupt you and put you in jail rather than worry about your well-being and future contributions. When it comes to taxes, the IRS is exactly like the mafia, except, you won't necessarily die. But, they can make you homeless and destitute.

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