Tax Law (Questions About Taxes)/Filing exempt on taxes??

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Question
QUESTION: Hello,

It was suggested to me that I file "exempt" on my W4 because I'm not bringing home a lot of money. So much tax is taken out! I'm single with no dependents now.

The problem is that I owe the IRS for the last two years because I filed for too many allowances during those years. (Filed for six allowances so I could have more money to work with)

Is it wise to file exempt in my situation?

Is there a way for me to bring home more of my earnings?

Thank you,

Michelle

ANSWER: no
exempt is even worse than 6... you will continue to owe more tax each year. yes, you filed for 6 so you could "have more money to work with" but that means you owed tax.  

how much do you owe the irs?  are you in a payment plan?  


are you at the same employer now? who suggested you claim exempt?  

---------- FOLLOW-UP ----------

QUESTION: Thank you for your prompt response.

I figured that filing exempt would be worse than using 6 allowances. It was suggested to me by a friend who is obviously NOT a tax expert.

I owe close to $2,000 for one year and close to $3,000 for another year.

No, I'm not on a payment plan.  I'm afraid they'll want so much money that I won't be able to pay my rent and eat.

Yes, I'm with the same employer now. Why do you ask?

Michelle

Answer
your employer should not have allowed the 6 exemptions.  

you need to work with the IRS now. you can maybe get a payment plan that might allow you to spread it over time, if they just come take the amounts you owe (via lien on your accounts) you might not like the outcome.  they can also pursue your employer for garnishment.  also at a rate higher then you might like.

they are not bad people if you talk to them.  

who prepared the returns that show you owe 2k and 3k?  I wonder if they are even right.

send me a NEW question, but mark it PRIVATE.

p

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19 years cpa. ms tax. NOTE: My discussions are only a general information and do not constitute tax advise without entering into a specific agreement and executing an engagement letter; This free chat is nothing more than general information and should not be construed as tax advice nor does my response or replies imply an agreement to provide client specific advice or other guidance for purposes of avoiding IRS tax or penalties and should not be relied upon without your own validation and confirmation of the how the discussion may fit your facts... Not having all the facts and/or not having a direct client relationship prevents me from providing the most accurate replies as possible and I highly suggest using a local CPA to provide you with written advice and guidance. Taking matters into your own hands is much akin to trying to land an airplane without a license. It is easy to FLY a plane, but LANDING is when critical experience is key. In short, caveat emptor; do your homework and don't just rely on free chat board advice anywhere, anytime.

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