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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28081
Experience:  Taxes, Immigration, Labor Relations
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I am a restuarant server. I make and claim high tips, therefore

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I am a restuarant server. I make and claim high tips, therefore I recieve a paycheck of zero. I pocket the tips but my hourly wage goes directly to Federal, State, Medicare and Social Security. I would like a percentage of my paycheck to go directly to the company's 401k. Can I llegally free up some money by claiming exempt or dependants (for example)? Then at the end of the year I can change it back to the appropriate tax and pay the tax out of pocket. Generally, I get money back anyways. I hate giving tthe government the money first.
Submitted: 5 years ago.
Category: Tax
Expert:  Lev replied 5 years ago.


Hi and welcome to Just Answer!

You may claim EXEMPT on your W4 form if you qualify.

You may claim exemption from withholding for 2011, and I certify that you meet both of the following conditions for exemption.

--Last year you had a right to a refund of all federal income tax withheld because I had no tax liability and

--This year you expect a refund of all federal income tax withheld because you expect to have no tax liability.
Otherwise – you should claim two allowances.


You may direct your payroll person to put a percentage of your wages into company's 401k plan. Your contribution to the 401k plan will be subject of FICA taxes, but not a subject of income taxes.
However - you might need to leave part of your tip income to your employer to cover your tax liability.
Let me know if you need any help.


What are allowances?


When you file W4 form - and provide it to your employer - you put a number of allowances on the line 5.
The number of allowances is your instruction to the payroll person about income tax withholding.
The payroll person use that number and withholding tables to determine the amount of income tax to be withheld.

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