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Old 01-24-2013, 12:19 PM   #6
sam_gordon
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Join Date: Jun 2010
Posts: 9,965

Quote:
Originally Posted by NeutralNovice View Post
@daughtersrus
I am able to claim exempt from Fed Income Taxes; however, I would still have to pay other withholding like SDI, SSI, etc.


Basically, what I am trying to do is this--hypothetically:

For this scenario, imagine that the only tax that exists is the Federal Income Tax.

Hypothetical #1
Claim: No Exemptions
Gross Income: $100,000
Withholding Rate: 25% ($25,000)
Calculated Tax Liability Rate: 15% ($15,000)
Expected Refund: $10,000
Overall Earnings After Tax: $85,000

Hypothetical #2
Claim: Exempt
Gross Income: $100,000
Withholding Rate: 0%
Calculated Tax Liability Rate: 15% ($15,000)
Expected to Owe: $15,000
Overall Earnings After Tax: $85,000
>>>Instead of the government holding my money and not paying interest, I am getting all the money and will put 15% of each check into a Savings Account that I won't touch.

So using a "Regular Deposit Savings Interest Calculator," I would deposit about $960 into account for each check or $1920/month, without touching it. Current APY is 1.00%. So at the end of the year, the interest accrued would be about $242.

Wow, so after all that, I would only make $242--and that's assuming I make $100k, which I don't LOL. Either way though, every penny counts--I guess I am just worried about the consequences if I claim exempt then just pay my actual tax liability in one lump sum.
What it sounds like you need to do is to change your withholding so that you get back $833 ($10K/12 months) more each month. So instead of claiming 0 dependents, throw some dependents in there. Your HR person can help you figure out how much will get you close to the $0 mark come April. And if you look at the W-4 form, you're claiming "allowances", NOT "exemptions".
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