Tax Witholdings

I'm thinking about reporting 10 on my W-4 for next year and not let the government take my money early. I thought that tax is suppose to be paid by April 14 and is not fully due till then.

So if instead of paying the government each pay period and I would pay them at the end of the year. I can use that money and put that in my savings account to make money off the interests instead of paying the government early.

I heard that I could get penalized for claiming too much on my W-4 but if tax is technically not due till April 14 then there shouldn't be any penalties or interests unless I paid the tax after April 14 which would mean that the Tax payment is in default. Then that would be reasonable for me to pay penalties and interests.

Can anyone verify this?

just watch out for underpayment penalty.

As I recal the they calculation quaterly, so if you income is not linear over the year, you can get stuffed.

Well, not at the moment. They are currently developing it right now. I'll link you guys the website as soon as I get a prototype up.

I'm still open to suggestions based on your experience as a property manager and the problems you've faced managing multiple single family homes or apartments.

Just so you know, if you claim more then 9, your employers payroll dept. may have to send a notice to the IRS and perhaps the state (that was the rule a few years ago). It doesn't mean something bad will happen, but you may want to consider 9, to avoid the potential hassle.

thanks for the help everyone... but has anyone actually claimed 10 on their W-4?

I also got a small business going on the side and I'm thinking about having my paycheck deposit directly to that account. So anything I spend on that account that is "Business Related" can be deductible.

What do you guys think?

For a couple of years back in the early 80s, I paid no income tax. I got a complete refund of everything withheld.

I filed a new W4 with my employer claiming 9 exemptions which effectively reduced my income tax withholds to zero for the year, but did not change social security withholdings. As I recall, claiming more than nine exemptions requires a letter of justification which must be sent to the IRS.

On the flip side, the income tax collection system is set up as a "pay as you go". Having your employer withhold income taxes from your paycheck each month allows the government to receive a continual stream of income to fund government operations.

if you don't pay as you go -- if your withholdings or quarterly estimated tax filings are not at least 90% of your prior year tax liability -- then you will be hit with an underpayment penalty when you file your return in April. Someone correct me if I am wrong, but I believe the underpayment penalty is 10%.

So, you can set your exemptions high enough that you have no income tax withholdings through the year, but you will pay 10% more in taxes than you would have needed to when you make a lump sum payment in April.