V8 Beast Posted January 27, 2008 Report Share Posted January 27, 2008 So what are the repocutions of going tax exempt on a paycheck that includes my yearly bonus? Beside having use of the money now, and not waiting for my tax return, what are the positives behind doing it? Quote Link to comment Share on other sites More sharing options...
88lx5oh Posted January 27, 2008 Report Share Posted January 27, 2008 paying in at the end of the year to the goverment Quote Link to comment Share on other sites More sharing options...
HAOLE Posted January 27, 2008 Report Share Posted January 27, 2008 Are you trying to be an independent contractor? If so you have several conditions that need to be met as set fourth by the IRS. If you meet them I would do it. This will allow you to operate as a business, and pay a much lower tax rate. Start here: http://www.irs.gov/businesses/small/article/0,,id=99921,00.html Quote Link to comment Share on other sites More sharing options...
V8 Beast Posted January 27, 2008 Author Report Share Posted January 27, 2008 Nope, was told by a few co-workers that we are legally permitted to go tax exempt a few times. I figured now would be a great time to do it since I'm doing some work on my house. Quote Link to comment Share on other sites More sharing options...
HAOLE Posted January 27, 2008 Report Share Posted January 27, 2008 Nope, was told by a few co-workers that we are legally permitted to go tax exempt a few times. I figured now would be a great time to do it since I'm doing some work on my house. If you are still an employee I have never heard of "tax exempt". Be care full, it does not smell right to me. The IRS code is so screwed up maybe there is such a thing. Quote Link to comment Share on other sites More sharing options...
88lx5oh Posted January 27, 2008 Report Share Posted January 27, 2008 i heard this to.. if you only do it so many times.. and they have to be spanned out so much.. and it has no affect when you file at the end of the year. dont know the exact details though Quote Link to comment Share on other sites More sharing options...
V8 Beast Posted January 27, 2008 Author Report Share Posted January 27, 2008 If you are still an employee I have never heard of "tax exempt". Be care full, it does not smell right to me. The IRS code is so screwed up maybe there is such a thing. Sorry it not tax exampt, it just filing so many dependents that they do not take taxes from that perticular pay period. You basically file an 8 and get your entire paycheck tax free. Quote Link to comment Share on other sites More sharing options...
HAOLE Posted January 27, 2008 Report Share Posted January 27, 2008 Are you talking about increasing your exemptions? Like" I have 10 kids" so I will have no tax withheld. Quote Link to comment Share on other sites More sharing options...
HAOLE Posted January 27, 2008 Report Share Posted January 27, 2008 Sorry it not tax exampt, it just filing so many dependents that they do not take taxes from that perticular pay period. You basically file an 8 and get your entire paycheck tax free. You posted that too quick. As far as I know you can do that anytime. I have had employees change them a different time of the year. It maybe a employer rule that you can only change that at a certain time. Quote Link to comment Share on other sites More sharing options...
V8 Beast Posted January 27, 2008 Author Report Share Posted January 27, 2008 Are you talking about increasing your exemptions? Like" I have 10 kids" so I will have no tax withheld. Beat ya to it Nice Ninja edit! Quote Link to comment Share on other sites More sharing options...
koolrayz Posted January 27, 2008 Report Share Posted January 27, 2008 I used to file tax exempt all the time 25 - 30 years ago. The Gov cracked down on it in the mid-early 80's as I recall. I'm not sure of the current regulations but After you claim around 8-10 the employer is required to contact the IRS. Years ago there were alot of people attempting to not pay any taxes, this was one of the way's they combated it. I suggest contacting you're accountant. Quote Link to comment Share on other sites More sharing options...
351mach11647545510 Posted January 27, 2008 Report Share Posted January 27, 2008 yea, guys at work do this all of the time when we have holiday pay like around times when we have more than one holiday on a check. the refer to this as going "married with 9" Quote Link to comment Share on other sites More sharing options...
V8 Beast Posted January 27, 2008 Author Report Share Posted January 27, 2008 I usally go Married with 1 to make sure I dont owe at the end of the year. So if I go Married and 9 no taxes will be withheld? Ray, It appears its ok if this is done less than 3 times per year, and its properly cliamed come tax time. Quote Link to comment Share on other sites More sharing options...
koolrayz Posted January 27, 2008 Report Share Posted January 27, 2008 IIRC there will still be a small amount of taxes witheld @married and 9. I dont believe they allow a true tax exempt W-4 status anymore. You used to be able to enter "tax exempt" on your W-4. Quote Link to comment Share on other sites More sharing options...
V8 Beast Posted January 27, 2008 Author Report Share Posted January 27, 2008 IIRC there will still be a small amount of taxes witheld @married and 9. I dont believe they allow a true tax exempt W-4 status anymore. You used to be able to enter "tax exempt" on your W-4. True, I'm just happy I can do all of my projects this year rather than waiting until next year. I wish they didnt tax bonus' at 40%!!!!! Quote Link to comment Share on other sites More sharing options...
wnaplay1647545503 Posted January 27, 2008 Report Share Posted January 27, 2008 We do it at work everyyear on our bonuses. I dont believe there is anything that says you have to pay taxes, until tax time. Just confirm that after you recieve your check, the switch is made back to taking your taxes out. Quote Link to comment Share on other sites More sharing options...
351mach11647545510 Posted January 27, 2008 Report Share Posted January 27, 2008 just make sure if you are doing it for one paycheck like with a bonus or overtime on it, you dont forget to switch it back right away. Quote Link to comment Share on other sites More sharing options...
evan9381 Posted January 27, 2008 Report Share Posted January 27, 2008 yep. i do collections and for the people who know they're getting a big bonus (since its not until 2nd check of following month), sometimes they will change the w-4 to little to no taxes are taken out. i dont think it matters because at the end of the year, youre still going to owe the government the same amount. the only thing thats going to change is how much they took from you thru the year example. you make 75k/yr, and have to pay 20k in taxes. they withhold 25 thru the year, you get a 5k refund or, you make 75k/yr, stil have to pay 20k in taxes, but you change your w4, they withhold 18k thru the year, youll pay in 09 now im sure these amounts arent anywhere near accurate, but it gives you an idea and i agree, 38.5% bonus tax blows! my 1st month at my new job, i had a 2250$ bonus, and i think around 1100 in hourly, and after taxes i got 2250. lol Quote Link to comment Share on other sites More sharing options...
iwishiwascool Posted January 27, 2008 Report Share Posted January 27, 2008 and i agree, 38.5% bonus tax blows! my 1st month at my new job, i had a 2250$ bonus, and i think around 1100 in hourly, and after taxes i got 2250. lol 40k a year isnt the 38% tax bracket. You mean week? Quote Link to comment Share on other sites More sharing options...
iwishiwascool Posted January 27, 2008 Report Share Posted January 27, 2008 http://farm3.static.flickr.com/2004/2223043337_79e9990b3e.jpg Quote Link to comment Share on other sites More sharing options...
evan9381 Posted January 27, 2008 Report Share Posted January 27, 2008 40k a year isnt the 38% tax bracket. You mean week? bonuses are taxes at 38%. in my 3 years doing this, and asking around with other people, all the bonuses are taxed at around 38% yeah right, it would blow if they took out 38% of every check i got. checks without bonus they usually hold about 21%. Quote Link to comment Share on other sites More sharing options...
iwishiwascool Posted January 27, 2008 Report Share Posted January 27, 2008 bonuses are taxes at 38%. in my 3 years doing this, and asking around with other people, all the bonuses are taxed at around 38% yeah right, it would blow if they took out 38% of every check i got. checks without bonus they usually hold about 21%. Gotcha Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.