kim@analog.UUCP (Kim Helliwell ) (03/04/86)
> At the beginning of this year, my wife and I moved into a new house. Of > course, the intestest part of the paryments are tax deductible. Is it > legal to increase the number of deductions on a W-4 so that we won't have > to have a huge tax refund at the end of the year? I hate given interest > free loans! If so, how do I go about figuring how many deductions to > take? Ask our local company employee office? Thanx. > > -- Brad Brahms > usenet: {decvax,ucbvax,ihnp4}!trwrb!trwspp!brahms > arpa: Brahms@usc-eclc > > Not only can you use the W-4 to set the number of deductions and adjust your withholding, it is also possible to calculate directly your projected tax liability, divide it by the number of pay periods in a year at your place of employment, and request that your payroll department take that amount out as a "BLANKET AMOUNT" per pay period. This is absolutely legal, and works for both Federal and State (California, anyway!), and I have done it for years. Doing this, I have always managed to be owed some, and so have avoided having to file quarterly estimated tax returns. My calculation usually involved adding 5-10% to the raw weekly amount as a cushion so that a bad estimate of one deduction won't lead to disaster! You should remember that the important concern for the IRS is that you not owe THEM too much at the end of the year ( > 200-400$, I believe). They don't like to give interest-free loans, either! hplabs!analog!kim
tonti@ptsfc.UUCP (Guy Tonti) (03/05/86)
In article <196@analog.UUCP>, kim@analog.UUCP (Kim Helliwell ) writes: > > You should remember that the important concern for the IRS is that you > not owe THEM too much at the end of the year ( > 200-400$, I believe). > They don't like to give interest-free loans, either! > > hplabs!analog!kim A few years back I asked a CPA friend about this, and he stated a good rule of thumb is that if you have less than 80% of your total federal tax liability withheld, it raises a red flag at the IRS and all kinds of mean and nasty things will happen! (What he said was they can make you pay interest on the amount not withheld, and put some type of lien on future wages, including quarterly reviews of tax owed, to insure it not occurring again. He also said they can come down pretty hard on the preparer of this return, which he did not elaborate on.)