Here's the deal:  I want as little money withheld from my paychecks as possible.  The extra money is going to earn interest for me until it comes time to pay taxes.  

My question is:  Can one just put down as many allowances as one wants in the W-4, or is there a limit to the number you can put down on line H?



Thanks in advance.

just don't mark anthing but the the line that asks are you single/married/a dependent


Thats the way I have done it and i dont have anything withheld

Quoted: just don't mark anthing but the the line that asks are you single/married/a dependent Thats the way I have done it and i dont have anything withheld

So you just ignore the whole worksheet thing, don't put down anything on Line H and just put a check mark on your marital status?

Quoted: just don't mark anthing but the the line that asks are you single/married/a dependent Thats the way I have done it and i dont have anything withheld

Zero dependents doesn't mean zero witholdings.  If you have nothing witheld, there has been an error somewhere.  If you don't have money withheld, you are mandated to pay estimated taxes.

Quoted: just don't mark anthing but the the line that asks are you single/married/a dependent Thats the way I have done it and i dont have anything withheld

That doesn't sound right at all. Your withholding is reduced as the number of dependents increases. The logic (if you can fathom that) is that those with more dependents need more cash. The lowered deductions are offset, theoretically, by lower tax rates and tax credits. You're having less taken out each paycheck, but at the end of the year, your tax burden is less. If you want to try to get a big tax refund check (i.e. give the government an interest-free installment loan for a year) then do as JBowles suggests, and have the maximum taken out.

Quoted: Zero dependents doesn't mean zero witholdings.  If you have nothing witheld, there has been an error somewhere.  If you don't have money withheld, you are mandated to pay estimated taxes.

And that's not all. If you owe more than 800 to $1000 dollars tax when you file, there is a penalty(yes, as in a monetary one). Check with your tax preparer or the IRS for all the Info!  

Im technicly still a dependent of my parents.

For exaple this year I owed  $27 in taxes.

I may be wrong it been awhile sence i looked a statment.

Quoted: Quoted: Zero dependents doesn't mean zero witholdings.  If you have nothing witheld, there has been an error somewhere.  If you don't have money withheld, you are mandated to pay estimated taxes. And that's not all. If you owe more than 800 to $1000 dollars tax when you file, there is a penalty(yes, as in a monetary one). Check with your tax preparer or the IRS for all the Info!

YIKES!  I didn't know anything about a penalty.

Wow.  Some serious misinformation here, as usual.

#1 - Go talk to your accountant.  Most people that play this game, do it without understanding the 'why' and the risks.  Then they get burned.

#2 - Typically, in most states, those that play this game, enter 14 for their allowances in box #5 on the bottom of the form.  (more than 14 allowances must be followed up with explanation documentation to the state and to the gov)  They then put $0 (zero dollars) for additional amount withheld.  This means NO TAXES ARE WITH-HELD AT EACH PAY PERIOD!!  (Sound great? READ CAUTION BELOW!!!!!)

#3 - YOU ARE OBLIGATED TO HAVE SUBMITTED 80% of your ACTUAL TAX OBLIGATION by December 31st, of THAT tax year.  IE, if you're gonna hypothetically owe $10k in taxes on some gross adjusted income, the IRS MUST HAVE RECEIVED $8k of it already come Jan 1 of the new year!!  If they have not, THIS is where you get slapped with the penalty!  You do not have to FILE your taxes;  just send your tax payments IN.  Your check MUST be accompanied by a tax payment form.

#4 - The remainder of your tax obligation is then due by April 15th as normal.

Unless you are VERY methodical about the extra cash that comes from your checks, you can VERY VERY easily get burned playing this game.   Few people that try this really make it work;  MOST people that try, fail to realize JUST HOW MUCH THEY PAY IN TAXES throughout the course of the year.  When it comes down to Turkey Day, and they start doing the math, the 'holy sh!t' factor kicks in, and they realize they're in big trouble because they shaved 'just a little here and there', spending bits of that supposed tax deferred investment instead of properly investing it.

Good luck,  Let me know if you need more info.

(FYI, I played this game for 3 years, never lost a dime, but never really came out THAT much further ahead to make it worth the ridiculous headache;  because of the volatility of investment vehicles that would make this game worthwhile, it really only works in a STRONG market/economy where funds and short term investments payout well)

ETA - I will add, this was the case 3 years ago when I still played the game.  The percentage obligation on 12/31 may have changed.  The accepted threshold for undocumented allowances may have changed. (you may be limited to 10, or 12, or some other unknown number)  As I stated in #1, TALK TO YOUR ACCOUNTANT before you even conceive of this investment strategy; lest you find yourself filing for an application for extension with the IRS and a setting up a payment plan the following year where you end up paying for TWO years taxes during the year. (yes, I've seen people that failed at this game end up having to do just that)

E.

Quoted: Im technicly still a dependent of my parents. For exaple this year I owed  $27 in taxes. I may be wrong it been awhile sence i looked a statment.

Jbowles,

What Ilanero is asking is nothing like what you have.

The threshold for what you can earn tax free (which you are probably just barely exceeding, given your $27 tax obligation if nothing was with-held throughout the year) is the average 'single unmarried filing' citizen personal exemption amount.  (For 2005, I believe it is $7,300)

Because you have no dependents, as long as you do not exceed that threshold, you will get back any tax monies your  employer with-holds on your behalf. (from the IRS in the form of a refund check when you file)

The type of saving/investing that Ilanero is talking about only comes into play when you makes THOUSANDS of dollars a month, with many hundreds of dollars going into tax payment with-holdings at each check.  Return on investment on tax payments that are below a few hundred dollars each month is pointless for this exercise.

E.

Thanks for the advice, NEPAshooter--if I run into something else I'll shoot you an IM.