W4 form Step 4(a)

[xylene]

There are lots of reasons why it is bad to be over-withheld, beyond losing out on interest.

I think we've all learned the risks of catastrophe impacting our government's ability to carry out business on a timely fashion, for one.

It is much much better to make an estimated payment.

 

[Zigner]

There are lots of reasons why it is bad to be over-withheld, beyond losing out on interest.

I think we've all learned the risks of catastrophe impacting our government's ability to carry out business on a timely fashion, for one.

It is much much better to make an estimated payment.

A fair enough point...

 

[LdiJ]

There are lots of reasons why it is bad to be over-withheld, beyond losing out on interest.

I think we've all learned the risks of catastrophe impacting our government's ability to carry out business on a timely fashion, for one.

It is much much better to make an estimated payment.

Not everybody agrees with you. For many people it is like a forced savings that allows them to be able to handle some things that would otherwise be difficult for them to handle. I have many elderly clients who use their tax refunds to pay their property taxes and homeowner's insurance for the year.

I have one young lady with children who uses hers to prepay her rent for the year. It makes life much more comfortable for her family throughout the year. Of course, she gets lots of refundable credits that have nothing to do with withholding so she will always have a big tax refund, even if she has nothing withheld at all (at least until her children are grown).

With interest rates the way that they are today, there is also little impact in losing interest.

 

[davew9128]

There are lots of reasons why it is bad to be over-withheld, beyond losing out on interest.

I think we've all learned the risks of catastrophe impacting our government's ability to carry out business on a timely fashion, for one.

It is much much better to make an estimated payment.

From a tax professional standpoint, the problem is that so many people who SHOULD be making estimated payments forget to, or when they have their return prepared, can't pull the records to remember what they did if they did.

One solution a professional can offer is to set up automatic payments upon filing of the return, but that's a one shot deal to get it done. It then falls on the taxpayer to remember to have sufficient funds in the account on the withdrawal date. The scheduled payment can be cancelled or altered after filing, but it takes a phone call to IRS to do it, and you can imagine why anyone would want to avoid that if at all possible.

By and large though, if someone's income is through regular periodic payments such as wages, retirement, or social security, they should be using normal withholding and not estimates.