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#285417 - 14/08/2006 12:15 Claiming Dependents-Sorta
russmeister enthusiast Registered: 14/07/2002 Posts: 344 Loc: South Carolina	Ok, so I only have myself and my wife but I'm looking to work with the wondeful tax system we have here in the good ol' US of A. Here's my problem: When I travel for work, I make a little extra income. This extra income places me in a higher tax bracket, thus I actually don't make much of the extra income. Let's say, as an example, I add an extra $1000. I may see $250-$300 of that, if that much. I'm wanting to change, just for the pay period where the extra income is paid, my number of dependents to say 3 or 4. I don't actually have that many dependents, obviously. After the pay period is over and my salary is back to normal, I would change my dependents back to 1 or 0. My question is this: Is this legal? I've looked through the tax laws at the irs.gov site but I can't find anything. Maybe someone can point me in the right direction? Everything I seem to find is dealing with the number of dependents you claim on your tax return, which for me will not change. I'm only looking to change it during a pay period. _________________________ Russ --------------------------------------------------------- "The difference between a successful person and others is not a lack of strength, not a lack of knowledge, but rather a lack of will." Vince Lombardi
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#285418 - 14/08/2006 12:21 Re: Claiming Dependents-Sorta [Re: russmeister]
mlord carpal tunnel Registered: 29/08/2000 Posts: 14496 Loc: Canada	It sure does not sound legal. In Canada, there's a little form we fill out to provide a tax base estimate for income, so that fatter paycheques are not taxed too highly (if they are, then we get the excess back the following spring). Cheers
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#285419 - 14/08/2006 13:11 Re: Claiming Dependents-Sorta [Re: russmeister]
wfaulk carpal tunnel Registered: 25/12/2000 Posts: 16706 Loc: Raleigh, NC US	IANATL, but I believe that it is legal. You can lie all you want to on that form; it's just there so that you get the correct amount held out of your paycheck for income taxes. Where a penalty comes into play is that if you owe a lot of taxes come tax day, they may charge you interest for not having sent in in all throughout the year. I've been in that situation once; one of the options is "let the IRS figure out how much interest you owe and bill you". They never billed me. Of course, I was only very slightly over the limit. I wouldn't take my word for it, though. Or at least I wouldn't if I were inclined to sue me if I was wrong. _________________________ Bitt Faulk
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#285420 - 14/08/2006 13:26 Re: Claiming Dependents-Sorta [Re: russmeister]
tfabris carpal tunnel Registered: 20/12/1999 Posts: 31604 Loc: Seattle, WA	Yeah, I'm pretty sure Bitt is right. The place where your tax REALLY gets worked out is on the 1040 form in April. The withholding is just there as a convenience. You can tell them to withhold as much or as little as you like. Although I also heard that if your withholding was too much different from your actual tax amount, there was a penalty, I'm not sure how different it would have had to be to incur the penalty. _________________________ Tony Fabris
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#285421 - 14/08/2006 13:29 Re: Claiming Dependents-Sorta [Re: tfabris]
mlord carpal tunnel Registered: 29/08/2000 Posts: 14496 Loc: Canada	No dispute here on the only tax form that really matters is the final form. But.. I would expect that deliberately providing false information ("number of dependents") on a federal tax form just might be a criminal offence, even in the USA.
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#285422 - 14/08/2006 13:29 Re: Claiming Dependents-Sorta [Re: wfaulk]
Robotic pooh-bah Registered: 06/04/2005 Posts: 2026 Loc: Seattle transplant	My understanding is that your taxes are not due until April 15th. Giving your money to the government for them to hold until that day is your choice- and a poor investment. You don't owe them interest... not until after tax day. At least, that's my understanding of it. Complexities abound and I'm not standing hard behind what I've said here, but years ago it was perfectly normal to claim a high number of dependents in order that your earnings went into your pocket until tax day. Some people don't like to do that because they think getting a refund is a good thing. I tend to think it's a no-interest loan that you just gave the government. That's my $0.02... _________________________ 10101311 (20GB- backup empeg) 10101466 (2x60GB, Eutronix/GreenLights Blue) (Stolen!)
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#285423 - 14/08/2006 13:37 Re: Claiming Dependents-Sorta [Re: mlord]
wfaulk carpal tunnel Registered: 25/12/2000 Posts: 16706 Loc: Raleigh, NC US	The form (W4) includes a worksheet that is not actually submitted to the government, but that worksheet actually gives you a line item to artificially inflate the number of dependents. Actually, from the instructions: Quote: If you are not exempt, complete the Personal Allowances Worksheet below. The worksheets on page 2 adjust your withholding allowances based on itemized deductions, certain credits, adjustments to income, or two-earner/two-job situations. Complete all worksheets that apply. However, you may claim fewer (or zero) allowances. And I consistently lie, since filling out the form accurately means that I end up paying way too much money come tax day. _________________________ Bitt Faulk
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#285424 - 14/08/2006 13:37 Re: Claiming Dependents-Sorta [Re: Robotic]
JBjorgen carpal tunnel Registered: 19/01/2002 Posts: 3584 Loc: Columbus, OH	Quote: Giving your money to the government for them to hold until that day is your choice- and a poor investment. That's correct if you are an independent contractor, but if you work for any company, they are required by law to withold taxes from your paycheck. They only way you can control how much they withold is to change the number of dependents you claim to skew the tax bracket. That said, I have no idea about the legality of doing so. I've never needed to bother. Also, I believe that even if you are an independent contractor, you can be penalized for not making quarterly estimated tax payments. _________________________ ~ John
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#285425 - 14/08/2006 13:39 Re: Claiming Dependents-Sorta [Re: Robotic]
wfaulk carpal tunnel Registered: 25/12/2000 Posts: 16706 Loc: Raleigh, NC US	Quote: Some people don't like to do that because they think getting a refund is a good thing. I tend to think it's a no-interest loan that you just gave the government. I don't think that getting a refund is a good thing. I think that having to cough up $2000 on April 15 is a bad thing. _________________________ Bitt Faulk
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#285426 - 14/08/2006 13:43 Re: Claiming Dependents-Sorta [Re: Robotic]
wfaulk carpal tunnel Registered: 25/12/2000 Posts: 16706 Loc: Raleigh, NC US	Quote: My understanding is that your taxes are not due until April 15th. Giving your money to the government for them to hold until that day is your choice- and a poor investment. You don't owe them interest... not until after tax day. From the 1040 instructions: Quote: *Estimated Tax Penalty* You may owe this penalty if: Line 75 is at least $1,000 and it is more than 10% of the tax shown on your return, or You did not pay enough estimated tax by any of the due dates. This is true even if you are due a refund. _________________________ Bitt Faulk
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#285427 - 14/08/2006 13:53 Re: Claiming Dependents-Sorta [Re: wfaulk]
Robotic pooh-bah Registered: 06/04/2005 Posts: 2026 Loc: Seattle transplant	Hmm- now I'm remembering why I hate April so much! _________________________ 10101311 (20GB- backup empeg) 10101466 (2x60GB, Eutronix/GreenLights Blue) (Stolen!)
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#285428 - 14/08/2006 17:56 Re: Claiming Dependents-Sorta [Re: russmeister]
Attack addict Registered: 01/03/2002 Posts: 599 Loc: Florida	I claimed 9 dependants last year but ended up having to pay an $100.00 fine for underpaying my taxes. If you under pay by more than $1000.00 two years in a row they will force you to file quarterly and fine you more than the $100.00. I remember using a site like this to help me figure out how much I would take home with the different number of dependants. _________________________ Chad
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#285429 - 14/08/2006 19:26 Re: Claiming Dependents-Sorta [Re: Attack]
russmeister enthusiast Registered: 14/07/2002 Posts: 344 Loc: South Carolina	I talked to our CPA and found out that I can claim as many exemptions (dependents) as I want but it's up to me to make sure that I have given the proper amount to the government at the end of the year. He recommended that I not claim more than 3 but I could if I wanted to. That would put me into a bracket where I wasn't paying enough taxes meaning I have to pay at the end of the year, which isn't necessarily a bad thing. So, yes, I can do what I was wanting to do. Thanks for the input guys. _________________________ Russ --------------------------------------------------------- "The difference between a successful person and others is not a lack of strength, not a lack of knowledge, but rather a lack of will." Vince Lombardi
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