Tax Question

[Gunslinger08]

Say I claim 10 or 15 on my tax forms so that my withholding is significantly lower. Will I get penalized at the end of the year for paying in so little? I know that people who submit their taxes on a quarterly basis have a penalty for being more than 10 or 15% off, but does this apply to normal workers who submit a 1040 at the end of the year as well? It'd be nice to take this money and put it into a high yield savings account until I have to pay it back in February.

 

[iamwiz82]

There are penalties for underpayment.

 

[dullard]

Originally posted by: joshsquall
but does this apply to normal workers who submit a 1040 at the end of the year as well?

Yes, it does apply to you as well. We are a pay as you go system, NOT a pay on April 15th system. If you pay in too little throughout the year, you may very well be subject to a hefty penalty. However, there are some exceptions where you can get away on certain years without paying the penalty.

Line 77, page 62, Estimated Tax Penalty.

Form to fill out to calculate your penalty (don't worry the IRS will be glad to do this form for you).

 

[KK]

It's probably based off a percentage. I was claiming >10 for most of the year, until the wife decided to go back to work, now I'm claiming Married and 0. Should about break even.

It sucks that government has went to this pay through out the year system.