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Jon Andrews
Jon Andrews, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 3118
Experience:  I deal with all levels of tax planning and controversy - from the ordinary to the complex.
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I heard I could claim EXEMPT and get no taxes taken out of my by wee

Customer Question

I work for a publicly traded company full time and make $44,000 a year and I am broke. I get about $1,000 taken out of paycheck per month. I heard I could claim "EXEMPT" and get no taxes taken out of my by weekly paycheck. So I asked my
HR person and they recommended against it. What should I do? Can I claim "EXEMPT"???

Please Help,

JorXXXXX XXXXX
Submitted: 8 years ago.
Category: Tax
Expert:  Jon Andrews replied 8 years ago.

You can only legally claim EXEMPT if you had $0 tax liability last year AND you reasonably expect your tax liability to be $0 this year.


You CAN claim more withholding allowances which will reduce the amount of tax withheld.


XXX@XXXXXX.XXX
Customer: replied 8 years ago.
Reply to Jon Andrews's Post: what does it take to have $0 tax liability?
Expert:  Jon Andrews replied 8 years ago.

What is your filing status? single, married, etc?


Do you have any other income? Do you have any children? Do you own your house? If so, how much is the mortgageinterest and property tax on the house?


jon

Customer: replied 8 years ago.
Reply to Jon Andrews's Post: single, no other income, no children, rent.
Expert:  Jon Andrews replied 8 years ago.

In order for you to have $0 tax liability for 2006, your income would have to be $8,450 or less.


Based on the information provided, your federal income tax will be approximately $5,445. If you were to claim EXEMPT, not only would you be doing something illegal but you would wind up owing the $5,445 on April 15 of next year.


jon

Jon Andrews, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 3118
Experience: I deal with all levels of tax planning and controversy - from the ordinary to the complex.
Jon Andrews and 5 other Tax Specialists are ready to help you
Customer: replied 8 years ago.
Relist: I still need help.
how illegal? do i have any other options, i'm at the end of my rope?

__________________________________________________

In order for you to have $0 tax liability for 2006, your income would have to be $8,450 or less.

Based on the information provided, your federal income tax will be approximately $5,445. If you were to claim EXEMPT, not only would you be doing something illegal but you would wind up owing the $5,445 on April 15 of next year.

jon
Expert:  Jon Andrews replied 8 years ago.

You have the option to increase your withholding allowances to an appropriate number. This will reduce, but not eliminate, the amount of tax being withheld.


Other than that, without knowing the specifics of your situation, it is difficult to give you a recommendation.


jon

Customer: replied 8 years ago.
Reply to Jon Andrews's Post: will i go to jail if i claim exempt? what is an appropriate number of allowances?
Expert:  Jon Andrews replied 8 years ago.

It is unlikely that you would go to jail for claiming EXEMPT. However, if you wind up owing a significant amount of tax and cannot pay it when due, the probability is increased.


An appropriate number of allowances would be however many causes approximately $450 per month of federal income tax to be deducted from your paycheck. That will vary depending on how your company computes the net pay. You should be able to get someone in the HR department to help you figure out the right number based on your company's system.


jon

Customer: replied 8 years ago.
Reply to Jon Andrews's Post: thank you for your help!
Expert:  Jon Andrews replied 8 years ago.

No problem - good luck.


jon

Customer: replied 8 years ago.
Reply to Jon Andrews's Post: sorry one more thing...refer below.

how will that $450 per month of federal income tax deducted from my paycheck effect what i owe at the end of the year?
________________________________________________________

An appropriate number of allowances would be however many causes approximately $450 per month of federal income tax to be deducted from your paycheck. That will vary depending on how your company computes the net pay. You should be able to get someone in the HR department to help you figure out the right number based on your company's system.
Expert:  Jon Andrews replied 8 years ago.

The $450 per month (not per paycheck) should be roughly equivalent to the actual tax due based on the information that you have provided. Therefore, if that were done for a full year you would not expect to owe much or to get much of a refund. It should be about break even.


jon

Customer: replied 8 years ago.
Reply to Jon Andrews's Post: thanks
Customer: replied 8 years ago.
sorry, one more thing.

shouldn't $450 per month already be the amount taken out for taxes?

__________________________________________________

The $450 per month (not per paycheck) should be roughly equivalent to the actual tax due based on the information that you have provided. Therefore, if that were done for a full year you would not expect to owe much or to get much of a refund. It should be about break even.
Expert:  Jon Andrews replied 8 years ago.

It should be - but, from the information you posted earlier, it appears that you might be having more taken out now.


jon

Customer: replied 8 years ago.
Reply to Jon Andrews's Post: is that possible?
Expert:  Jon Andrews replied 8 years ago.

Is what possible?

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