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Financial Guru's - QUESTION??? Is it wise to stop my FED & STATE withholding in my paycheck?

 
Anonymous Coward
User ID: 968654
United States
07/01/2010 01:37 PM
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Financial Guru's - QUESTION??? Is it wise to stop my FED & STATE withholding in my paycheck?
Hear me out....

If I simply make myself EXEMPT on my tax documents at work, they do not withhold FED or STATE tax money - they just take the FICA and MEDICAID. This leaves me on the hook to save it on my own and obviously I would owe at the end of the year - but I would pay what I owe with what I saved. This does eliminate any refund - but I am becoming skeptical of a government IOU or something. Worse - if there is some economy collapse - who is to say taxes would even continue until order is restored?

I realize if the U.S. Dollar becomes null, then it is what it is and I am in the same boat as 300 million others. But at least if I have it in my possession (not in the bank), I would feel like I had more options.

Is it more wise to save it myself and pay at filing, or to keep it withheld and file for my refund?

Any consequences for saving it on my own?

No too much on the Internet that I can find.

Thanks for the help!
Catseye

User ID: 1022018
Dominican Republic
07/01/2010 02:21 PM
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Re: Financial Guru's - QUESTION??? Is it wise to stop my FED & STATE withholding in my paycheck?
The W4 is the form you fill out to tell the employer how much to withhold. Do you know how you filled it out? Like what is your filing status (married, head of household, single), how many dependents?

Line 7 says

Last year I had a refund of all federal tax . . . because I had no tax liability and
This year I expect a refund of all federal tax . . . because I expect no tax liability.

If you always get all your federal w/h back then write "exempt" on line 7 and they won't withhold it. So they won't take it out and you have it every week. Then you won't get a refund unless it's from other credits.

So just ask for a new W4 and say you have to make some changes. It's up to you if you want the money during the year or get it refunded. My new philosophy about taxes is lie like hell, it's the only way to make the gov't learn. Cut them off, and cut big business off, too. I worked in a tax office for 15 years, doing taxes and helping people weasel out of IRS problems. I guess I should write a book.

A good way to lie which is what all the ghetto people do is to invent a Schedule C business like lawn care or something you can do on your own and easily fabricate. If you show a loss, then it will lower your taxable income. Ghetto people use it to show income they don't have so they can qualify for the EIC, worth thousands of dollars depending on if you have one or two dependent children. The gov't could save billions if they cut out EIC, most of it is fraudulently claimed.
Forgive your enemies, it messes with their heads.
NewRevolution

User ID: 1018547
United States
07/01/2010 02:24 PM
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Re: Financial Guru's - QUESTION??? Is it wise to stop my FED & STATE withholding in my paycheck?
You are suppose to pay taxes throughout the year.

If not, you could be penalized.

Here is something from the IRS website:

Underpayment Penalty for 2009
If you did not pay enough tax, either through withholding or by making timely estimated tax payments, you will have an underpayment of estimated tax and you may have to pay a penalty.

Generally, you will not have to pay a penalty for 2009 if any of the following situations applies.

The total of your withholding and estimated tax payments was at least as much as your 2008 tax (or 110% of your 2008 tax if your AGI was more than $150,000, $75,000 if your 2009 filing status is married filing separately) and you paid all required estimated tax payments on time.

The tax balance due on your 2009 return is no more than 10% of your total 2009 tax, and you paid all required estimated tax payments on time.

Your total 2009 tax minus your withholding and refundable credits is less than $1,000.

You did not have a tax liability for 2008 and your 2008 tax year was 12 months.

You did not have any withholding taxes and your current year tax less any household employment taxes is less than $1,000.
NewRevolution

User ID: 1018547
United States
07/01/2010 02:25 PM
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Re: Financial Guru's - QUESTION??? Is it wise to stop my FED & STATE withholding in my paycheck?
Sorry, here is link

[link to www.irs.gov]
Anonymous Coward
User ID: 1012473
United States
07/01/2010 02:26 PM
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Re: Financial Guru's - QUESTION??? Is it wise to stop my FED & STATE withholding in my paycheck?
Consider this...

You don't withhold anything; the dollar devalues to 1/3 of its current value, and a new form of currency is introduced for which you have to exchange your dollars. You turn in 3 dollars for one of the new currency...

Hhmmmmmm...

I'd let the fed take the money now, hope for a refund, and not have to pay later when maybe it will cost you MORE.
Anonymous Coward
User ID: 430043
United States
07/01/2010 02:28 PM
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Re: Financial Guru's - QUESTION??? Is it wise to stop my FED & STATE withholding in my paycheck?
If you're not a federal employee living in D.C. then you have no federal tax liability. Anyone telling you otherwise is a liar or a sucker.
Mickeyblue
User ID: 1022063
United States
07/01/2010 02:28 PM
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Re: Financial Guru's - QUESTION??? Is it wise to stop my FED & STATE withholding in my paycheck?
You would be making a huge mistake.

You will have to estimate for them each quarter and pay the estimated tax you think you would owe.

I kind of think that you would lack the discipline to do this and I do not mean this in a derogatory way, just the truth of it.

Intentions are one thing, reality is another.
Catseye

User ID: 1022018
Dominican Republic
07/01/2010 02:30 PM
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Re: Financial Guru's - QUESTION??? Is it wise to stop my FED & STATE withholding in my paycheck?
This is about how to fill out the W4:


[link to taxes.about.com]

If you fill out the W4 correctly, you should be close to breaking even and not get much of a refund.
Forgive your enemies, it messes with their heads.
JohnDoe

User ID: 736738
United States
07/01/2010 02:37 PM
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Re: Financial Guru's - QUESTION??? Is it wise to stop my FED & STATE withholding in my paycheck?
If you're not a federal employee living in D.C. then you have no federal tax liability. Anyone telling you otherwise is a liar or a sucker.
 Quoting: Anonymous Coward 430043


And you will eventually find out the hard way, like so many others.

[link to www.irs.gov]

I don't advocate the fraudulent IRS or their theft of our money. There are ways to beat them, but this is not it.
JohnDoe

User ID: 736738
United States
07/01/2010 02:42 PM
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Re: Financial Guru's - QUESTION??? Is it wise to stop my FED & STATE withholding in my paycheck?
To answer your question OP, it is not wise. Whenever you claim Exempt on your W-4, your employer is obligated to notify the IRS. This flags you for audit. Of course, they won't audit you right away. They'll let the penalties and interest pile up and THEN audit you. You can claim up to Married with 10 exemptions without the IRS being notified and it will probably get you pretty much the result you're looking for.

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