| Does anyone just pay your taxes at the end of the year... |
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GotGoalz
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| Does anyone just pay your taxes at the end of the year... |
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instead of letting Sam take it out of your pay check? I want to have it where they won't take any taxes through out the year and I will put that money in a high yield savings account and just pay my taxes in january. My friend thinks that there is a penalty of some sort if I do this. Does this make sense to you guys?  
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Wed Sep 28, 2005 1:14 pm |
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sayyes
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This is a great idea, but unfortunately your friend is correct. There is a penalty if you don't pay a certain percentage of the taxes you owe throughout the year.
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Wed Sep 28, 2005 7:23 pm |
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efflandt
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If you do not have enough withholding or make quarterly estimated tax payments, and you owe more than $1000 when you pay your taxes, you may get hit with a penalty. And withholding may become "required" instead of optional for certain investment payouts.
See http://www.irs.gov/publications/p505/index.html
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Thu Sep 29, 2005 12:02 am |
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Rolo
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Chris is right. You can underpay a certain amount with certain restrictions. Buy a tax book (Ernst & Young or J.K. Lasser are good) to get the specifics.
I pay quarterly estimated payments.
"Expect me when you see me."
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Thu Sep 29, 2005 12:09 am |
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GotGoalz
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ok guys. this advise is much appreciated!
thanks. 
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Thu Sep 29, 2005 1:17 am |
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Andrew
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Rolo, do you use the form in this document, something else, or what?
http://www.irs.gov/pub/irs-pdf/p505.pdf
And what kind of penalties are we talking even if you are able to pony-up all the money by April?
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Thu Sep 29, 2005 7:28 pm |
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Rolo
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No, I pay a smidge more than the prior year, which ends up being about 80% of my total tax liability. You won't get the penalty if you've had more income this year than last year, which is always the case for me.
"Expect me when you see me."
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Thu Sep 29, 2005 11:47 pm |
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auggyf
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If you are an employee, you get to control how much is withheld from your wages. On the main irs.gov homepage there is a link to http://www.irs.gov/individuals/article/0,,id=96196,00.html which will help you set your withholding level on your W4 to be approximately the right level so you don't pay too much or too little over the course of the year.
If you really know what you are doing, I believe you can take the approach Rolo did: pay just enough to not get penalized. The only difficulty is that I don't think you can label yourself as "exempt" (say, after you've paid enough to not get penalized for the year), since you need to sign a statement saying you meet certain conditions, which you probably don't. But you could just bump up the exemption # which may reduce your withholding a little bit.
Special non-wage items, like bonuses and ordinary stock option income, should be forced to be at a fixed withholding rate (is it 25%) no matter what you put on your W4.
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Wed Oct 19, 2005 3:10 pm |
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cangiz
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Thanks for the tax advise guys, I will follow it.
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Mon Nov 21, 2005 12:04 am |
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