Have Tax Questions? Ask a Tax Expert for Answers ASAP
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.
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?
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.
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.
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.
No problem - good luck.
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.
It should be - but, from the information you posted earlier, it appears that you might be having more taken out now.
Is what possible?