About Karen Brawner Expertise I will help you with your questions regarding personal taxes and sole-proprietorships. I prefer not to answer questions regarding Coporations, Partnerships and LLC`s... Been in accounting and tax preparation field for 38 years, in business for myself in the same fields for 10 years prior to retirement due to disability.
Experience Been in the field of bookkeeping, accounting and tax preparation for 38 years. Had my own bookkeeping and accounting firm for 10 years and then turned it over to my daughter when I became disabled.
What about changing my witholding status. Lots of people claim more or less allowances depending on what they foresee their taxable income to be.
Since I couldn;t claim exempt, I changed my witholding status to Married with 10 allowances. I still expect to receive a refund at the end of the year. Is this also illegal?
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Followup To
Question -
For the last couple of years I have been adjusting my W-2 witholding amount throughout the year.
For much of the year I would claim "Exempt" so that no federal income tax was taken out of my check. Other months I would change it back to another witholding amount in an effort to balance my witholding so I wouldnt owe at the end of the year.
I have since then switched employers and now work for a gov't contractor. I claimed exempt most of the first year with them.
Then after a calendar year has passed, the internal system sent me a note saying that I had to renew my exemption status because they were only good for a year.
When I went back in to claim exempt, it shows a message about "perjury" and that I am verifying that I can only claim exempt if I didn't have any tax liability last year and didn't expect any this year. Both of which arent exactly true. (I had tax liability last year and expect some this year)
Are there any ramifications for claiming exempt when you do have tax liability as long as you don't end up owing the gov't in the end?
Please let me know.
Thanks.
Answer -
Dear G, YES...... You can only claim exempt if you KNOW that you have NO taxable income.... Yours is not the case....
By law (IRS), you can not claim exempt because you have taxable income whether or not you owe at the end of the year or get a refund.... By IRS law you must pay federal withholding taxes every quarter based on your income and this is done by having the proper amount taken out each pay check to cover the income...
Ramifications are that the IRS can attach a penalty to your tax return for not matching your taxable income... The IRS can also go after your employer for NOT withholding federal withholding taxes on your pay checks even though you told them not to by claiming exempt and if that happened, you could get fired....
thank you, karen
Answer Dear G, YES, this is also illegal.... If you are married, and have NO children then your options are to claim Married-0, or married-1 or married-2... You can not claim MORE exemptions than you actually have.... Therefore if it is just you and your wife, you can claim married-2 but your wife if she works would have to claim married-0.... Get my drift here....
