lutton@inmet.UUCP (10/08/84)
<> Practically everybody I know fills out his/her W-4 form taking as few exemptions as possible so that in April he/she will get a nice big fat refund check from the I.R.S. This is enforced savings at 0% interest. If only there were some way I myself could take advantage of such mass stupidity! But alas! only the Government benefits, and all this extra revenue is NOT used to decrease my own taxes.
dvs@hpfclo.UUCP (dvs) (10/09/84)
I certainly see the value of using your own money throughout the year, as opposed to letting Uncle Sam have his way with you. My question is this: Is there a legal limit to the number of exemptions you can take on your W4 ?
drp@ptsfb.UUCP (Dale Pederson) (10/10/84)
> <> > Practically everybody I know fills out his/her W-4 form taking as > few exemptions as possible so that in April he/she will get a nice > big fat refund check from the I.R.S. This is enforced savings at > 0% interest. If only there were some way I myself could take > advantage of such mass stupidity! You must have a lot of non-homeowner friends, people that I know mostly own a home and learned to increase deductions so that they could meet the mortgage payments!
woof@hpfcla.UUCP (woof) (10/16/84)
The legal limit doesn't have to do with how many exemptions you take, but with how much you owe the IRS. You have to pay a penalty if you owe the IRS more than 20% of your total tax bill, with a few exceptions (e.g., you paid in enough to cover your tax bill of last year, but it was less than 80% of what you owe this year). Steve Wolf [hplabs,ihnp4]!hpfcla!woof
john@hp-pcd.UUCP (john) (10/21/84)
<<< Unfortunatly for some people that is the only way that they can save money. But thats better than some people I know that think getting a refund means that they didn't have to pay any taxes at all. If you itemize,have a IRA or do anything that reduces your tax then you should increase your number of exemptions on your W-4 to prevent a over witholding. If you really get creative on the number of exemptions that you claim then you can use the goverments money from now until April 15th. You also get penalties for underestimating taxes if you fail the 80% test so its safest to try and make it come out even. Going overboard on the number of exemptions can also bring on a $500 civil penalty or $1000 and straight to jail if you tell any fibs. Nasty stuff. I think refunds are a goverment plot to get everyone to file early. Why not wait until April 15th and then send them a check. Saves all the worring about wheter or not your check will get lost in the mail. John Eaton !hplabs!hp-pcd!john
johnl@godot.UUCP (10/25/84)
Near as I can tell, the IRS doesn't much care how many exemptions you claim so long as at least of 80% of the tax owed is witheld or paid as estimated taxes. If you pay less, you get to fill out bright pink form 2210, which has four extremely complicated ways to figure out if you owe a penalty for not making timely payments. John Levine, ima!johnl
wildbill@ucbvax.ARPA (William J. Laubenheimer) (10/26/84)
> Near as I can tell, the IRS doesn't much care how many exemptions you claim > so long as at least of 80% of the tax owed is witheld or paid as estimated > taxes. If you pay less, you get to fill out bright pink form 2210, which > has four extremely complicated ways to figure out if you owe a penalty for > not making timely payments. > John Levine, ima!johnl This is what they tell you, but unfortunately, it doesn't seem to be their actual policy. I had loads of fun with this in 1983. In the instructions to the form 1040ES (1983), their instructions were to assume 10% withholding on dividend and interest income. Since this would cover my estimated tax liability for 1983, I did not make an estimated tax payment, even though (at the time) it seemed pretty clear that Congress would overturn the withholding measure. Comes early August, and Congress does in fact overturn the dividend and interest withholding measure. So, to be a good little taxpayer, I send in half my estimated liability on 15 September. Then, in the fourth quarter, I make about twice as much consulting income as I had planned on. I make a good rough estimate and send in about twice what I had sent in in September on 15 January, file my taxes in April (winding up with a refund due), and forget about it. The IRS looks at my return and objects to my payment pattern. They charge me $15 penalties and interest, "...or fill out this 2210 and show us why your payments were adequate". Since my payments were ahead of actual taxes owed throughout the year, I don't raise a stink, send in the form, and get my $15 back. Nonetheless, despite having paid more than my actual liability throughout the year, they still wanted to know that I was actually doing this. Bill Laubenheimer ----------------------------------------UC-Berkeley Computer Science ...Killjoy went that-a-way---> ucbvax!wildbill
adm@cbneb.UUCP (12/01/84)
.
There is no legal limit to how many deduction you can take on the
W4. However, the employer is required to inform the IRS if
you claim 15 or more dependants. This just means you may have
to prove to the IRS that you can have this many dependants
and still meet the 80% rule.
Also, the penalty for underpayment has been reduced in the most
recent tax law. The penalty is now ~10% of the difference between
your prepayments and the 80% requirement (or whatever requirement
you must meet). The underpayment penalty used to be ~10% of
the difference between your prepayments and your tax liability
for the year.
Finally, if you estimate your tax liability about this time of year
you can under-withhold below the 80% requirement. But you must be
willing to send the IRS a payment before the end of the year
(or perhaps Jan 15) to meet the 80% requirement.
Don't forget that the other minimum requirement is last year's
liability. For us the difference between the 80% rule and
last year's liablity is ~$2500. That's a lot of interest.
Mark Vonder Haar (two words, one name)
{ihnp4!cbnap!mvh}