Tax question, is this illegal?

[Nocturnal]

You know how you have to put down your # of federal and state allowances? If I were to put 10 for my federal and 20 for my state, is that illegal? No right? That means that I will get the money now rather than when tax time comes and that I may have to owe money to the state/federal when I file taxes, correct?

 

[Vic]

I assume you're speaking of the W-4 form? Yes, claiming 10 and 20 would be illegal, but only because the maximum number is 9. 🙂 Beyond that is "exempt" for which you need to provide a valid reason, something along the lines that you won't make enough money to have to pay taxes at the end of the year, etc. Otherwise, you are free to pick any number between 0 and 9. IIRC, the number must be the same for both state and federal. If you owe more than $1000 in federal at the end of the year, you will begin to incur penalties.

 

[TallBill]

Originally posted by: Vic
I assume you're speaking of the W-4 form? Yes, claiming 10 and 20 would be illegal, but only because the maximum number is 9. 🙂 Beyond that is "exempt" for which you need to provide a valid reason, something along the lines that you won't make enough money to have to pay taxes at the end of the year, etc. Otherwise, you are free to pick any number between 0 and 9. IIRC, the number must be the same for both state and federal. If you owe more than $1000 in federal at the end of the year, you will begin to incur penalties.

*scratches off "75"*

 

[Nocturnal]

I'm reading this FAQ at www.irs.gov and it says you aren't even supposed to change it unless say for instance you had 0 then you had a child and are going to claim him so you change it to 1. That's the only time you should be changing it. That's cool, I'm going to abide by the rules. I thought it didn't matter but indeed it does.

 

[KK]

Last year I had claimed married and 9 exemptions, I know I had to pay atleast 1500 in taxes. Never payed any type of penalty for it either.

 

[Vic]

Originally posted by: Nocturnal
I'm reading this FAQ at www.irs.gov and it says you aren't even supposed to change it unless say for instance you had 0 then you had a child and are going to claim him so you change it to 1. That's the only time you should be changing it. That's cool, I'm going to abide by the rules. I thought it didn't matter but indeed it does.

I believe that's just a guideline, not law. It's in the IRS' interest to have you overwithhold. That's a interest-free loan you give them, and they derive additional revenue on the margin, plus ensure that the taxpayer doesn't come up short in April.

 

[YoshiSato]

Originally posted by: Vic

Originally posted by: Nocturnal
I'm reading this FAQ at www.irs.gov and it says you aren't even supposed to change it unless say for instance you had 0 then you had a child and are going to claim him so you change it to 1. That's the only time you should be changing it. That's cool, I'm going to abide by the rules. I thought it didn't matter but indeed it does.

I believe that's just a guideline, not law. It's in the IRS' interest to have you overwithhold. That's a interest-free loan you give them, and they derive additional revenue on the margin, plus ensure that the taxpayer doesn't come up short in April.

I should get intreset on overpayment. Hell they get interest on my underpayment if I don;t pay enough.

 

[Nocturnal]

ttt