Income Tax Question - Better to claim exempt then pay later?

Discussion in 'Community Board' started by NeutralNovice, Jan 24, 2013.

  1. deserrai

    deserrai DIS Veteran

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    You must pay at least 90% of the current year tax or 100% of the prior year tax. You must pay it evenly throughout the year in quarterly estimated payments or you must pay it in federal withholding. Failure to do so results in an estimated tax penalty.
     
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  3. tvguy

    tvguy Question anything the facts don't support.

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    The oversimplistic....but reality of it is, the government wants the tax money as soon as they can get it. So like everyone said, the ideal situation is to pay as you go and owe nothing, and get nothing back at the end of the year.

    I used to be able to do that, by claming zero exemptions, and having a specific percentage of my pay withheld.
    But they change the law and you can no longer have a percentage withheld, you have to use the withholding tables.

    If I take 4 exemptions, I end up owing the feds about $1,000 and the state about $200.

    If I take 3 exemptions, I get $1,000 back, and owe the state about $100. Why the federal and state witholding tables are so out of wack, i don't know.
     
  4. MinnieLovesMickey12

    MinnieLovesMickey12 DIS Veteran

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    Just one other tidbit of info just to clarify...if you make $100,000 a year or more you will be paying a 25% federal income tax, not 15%. That is the 2012 tax rate. You would pay close to $10,000 right off the bat and then you pay 25% tax on any income over $70,000. And that is for married filing jointly which is the lesser of the tax burdens.

    If you are single your taxes jump to around $17,000 then 28% for anything over $87,000.
     

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