No Withholding Tax!

[FredLooban]

What is the name of your state (only U.S. law)? California

Our company let us control how much money we can withhold, is it OK if just pay my income tax on April 15 of the tax year?

For example I put exempt and at the end of this year there is $0.0 withholding tax on me, I owe $3K IRS can I just pay them on April 15, 2015?

Can I do this every year? Will there be a fine or penalty for that? Or will I get a friendly letter from the IRS?

This is the very first time I am gonna do this because I am just tight on money this year.

Thanks a lot you Guys!

Fred

 

[Proserpina]

You appear to be one of two things:

1. Someone doing homework or,
2. Someone has had an awful lot of "friends" with tax issues


Pick one please

 

[FlyingRon]

A company that doesn't withhold the taxes for employees is operating illegaly.

Independent contractors and other self-employed people are responsible for making quarterly estimated tax payments. If you don't make them you can be subject to penalties. No you just can't wait and pay it all at filing time.

 

[anteater]

You can claim exemption from withholding for the current year only if both the following situations apply.

- For the prior year, you had a right to a refund of all federal income tax withheld because you had no tax liability.
- For the current year, you expect a refund of all federal income tax withheld because you expect to have no tax liability.

Doesn't sound like you meet those conditions.

 

[LdiJ]

What is the name of your state (only U.S. law)? California

Our company let us control how much money we can withhold, is it OK if just pay my income tax on April 15 of the tax year?

For example I put exempt and at the end of this year there is $0.0 withholding tax on me, I owe $3K IRS can I just pay them on April 15, 2015?

Can I do this every year? Will there be a fine or penalty for that? Or will I get a friendly letter from the IRS?

This is the very first time I am gonna do this because I am just tight on money this year.

Thanks a lot you Guys!

Fred

Yes, there would be a penalty for under withholding.

 

[margaretB]

A withholding tax, also called a retention tax, is a government requirement for the payer of an item of income to withhold or deduct tax from the payment, and pay that tax to the government. In most jurisdictions, withholding tax applies to employment income. Many jurisdictions also require withholding tax on payments of interest or dividends.

 

[FlyingRon]

A withholding tax, also called a retention tax, is a government requirement for the payer of an item of income to withhold or deduct tax from the payment, and pay that tax to the government. In most jurisdictions, withholding tax applies to employment income. Many jurisdictions also require withholding tax on payments of interest or dividends.

Thanks for the useless definition which does nothing to answer the question asked. I know of NO jurisdictions (federal or local) that require withholding tax on payments of "interest or dividends" provided the taxpayer has provided the proper identification (TIN/SNN).

 

[LdiJ]

Thanks for the useless definition which does nothing to answer the question asked. I know of NO jurisdictions (federal or local) that require withholding tax on payments of "interest or dividends" provided the taxpayer has provided the proper identification (TIN/SNN).

I would have to look this up to be specific on the details...but there is something in the tax code that the permits the IRS to require withholding from interest and dividends in situations other that a lack of proper TIN/SSN. If someone has considerable IRS debt, and/or a history of owing a considerable amount at the end of the year because of high interest or dividend income, and does not file estimated taxes, then the IRS can require the payer to withhold income tax. Its a pretty rare phenomena, but it can happen.

 

[FredLooban]

You appear to be one of two things:

1. Someone doing homework or,
2. Someone has had an awful lot of "friends" with tax issues


Pick one please

No it's for me.

 

[LdiJ]

No it's for me.

If its for you, then you can count on being penalized for under withholding. You are not permitted to declared yourself exempt unless you truly are exempt.

 

[FredLooban]

Yes, there would be a penalty for under withholding.

Oh I thought it's gonna be OK!

My last withholding tax was short of $200.00+ but I did not get any penalty.

I did pay around $3K though, I meant I withhold that amount but I estimated my tax wrong.

No letter from them or call though.

 

[LdiJ]

Oh I thought it's gonna be OK!

My last withholding tax was short of $200.00+ but I did not get any penalty.

I did pay around $3K though, I meant I withhold that amount but I estimated my tax wrong.

No letter from them or call though.

That is because your shortage was only $200.00. That is not enough to trigger a penalty. The formulas for triggering penalties are somewhat complicated, but a good rule of thumb is that if your balance due is less than 10% of your actual tax, you won't be penalized.

 

[davew128]

I would have to look this up to be specific on the details...but there is something in the tax code that the permits the IRS to require withholding from interest and dividends in situations other that a lack of proper TIN/SSN. If someone has considerable IRS debt, and/or a history of owing a considerable amount at the end of the year because of high interest or dividend income, and does not file estimated taxes, then the IRS can require the payer to withhold income tax. Its a pretty rare phenomena, but it can happen.

I'd like to see that citation.

 

[LdiJ]

I'd like to see that citation.

I appreciate you wanting to see that citation. However its just not important enough to me to go dig it out. When it applies to my clients its already a done deal. I have no input. The withholding already happened. I simply know that it can happen and does happen...but is rare.