Ahhh OK, then take as many as you have and no more. I am told by my account many folks take less than they are allowed so they get money back at tax time.
Do you have a link for the source of that info?
I think it has to do with what you actually pay regarding taxes....not what’s on your W-2 regarding dependents. You end up paying what you honestly owe. I know one tax prep guy who has recommended it.
Correct, but if you are handy with math and careful, you can work it to just under pennies owed before penalties. Additionally, you can do the same thing with extensions. The point is to try - to absolutely minimize the regular tribute to tyranny. Another is to apply for every benefit, grant, etc. whether you know you don’t qualify or not. Every minute a government automaton spends denying your application is a minute lost to a habitual user’s application.
“Your idea, while it sounds O.K. is illegal, the Gov has already taken care of that ploy, and has made it illegal to overclaim dependents. Check with your tax preparer.”
I haven’t been a w-2 employee for 7 years, but my recollection is that you have the idea mixed up. It is illegal to overclaim dependents on your tax return.
However, for the deduction number you give your employer, you do a worksheet. The worksheet gives you a final number and that is what the employer uses to figure out your withholding. The worksheet itself is not something you file. Furthermore, the number your provide has no bearing on your actual tax burden. It just changes your withholding amount.
Most people should adjust their deduction number anyway, and don’t. If you have a mortgage, kids, etc.
My idea is that those of us who file quarterlies should severely underestimate our income and send very low amounts. The penalties are very small compared to the money you get to hang on to while you wait for April 15.
The last idea in the write-up is good and bad. Yes, a s-corp can give you more deductions. At some point you have to show some income or you will be naked to an audit. Also, there is a lot of chatter that the lawmakers want to make all dividends taxable as wages for service based s-corps. Doctors, lawyers, IT, accountants, etc... we’ll all have to grease up.
The main point is to be like me. I end up PAYING taxes every spring, but just below the “penalty” limit. Instead of the government borrowing my money, I borrow theirs.
And I don’t have to worry about a refund IOU. :)
W4 withholding allowance is different than the exemptions allowed;
IRS Withholding Calculator
http://www.irs.gov/individuals/article/0,,id=96196,00.html
Who Can Benefit From This Application?
* Employees who would like to change their withholding to reduce their tax refund or their balance due;
You have to have paid in no less than 90% of your years taxes by the time yo send your 1040. If you work for yourself or otherwise don’t get withheld you have to make quarterly payments.