Claiming Exempt on W4 and filing estimated taxes?

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Joel
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Claiming Exempt on W4 and filing estimated taxes?

Post by Joel » Sun Jan 29, 2017 7:33 pm

Does anyone claim exempt on their w4 and file quarterly estimated taxes instead?

I've been considered reducing my paycheck withholdings and paying quarterly estimated taxes in order to increase spending that is eligible for credit card churning. I have no problem calculating my tax owed, and already estimate it throughout the year and adjust my withholdings as appropriate. We are married with no kids, but since we are both working, we each have to claim single + # to get the right amount withheld. Am I required to withhold at least Married + 2? What if I claimed Married + 10 or something to really reduce the withholdings without actually claiming exempt?
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tfb
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Re: Claiming Exempt on W4 and filing estimated taxes?

Post by tfb » Sun Jan 29, 2017 7:57 pm

What does the form say?
I claim exemption from withholding for 2017, and I certify that I meet both of the following conditions for exemption.
• Last year I had a right to a refund of all federal income tax withheld because I had no tax liability, and
• This year I expect a refund of all federal income tax withheld because I expect to have no tax liability.
If you meet both conditions, write “Exempt” here .
It doesn't sound like you meet either condition.
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Spirit Rider
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Re: Claiming Exempt on W4 and filing estimated taxes?

Post by Spirit Rider » Sun Jan 29, 2017 8:10 pm

As tfb said, you are not eligible to claim exempt. Doing that or claiming allowances you were not entitled to would be a great way to get a dreaded IRS "lock-in letter". Look it up to see if you want it ordered that you can no longer change your W-4 ever again.

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Joel
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Re: Claiming Exempt on W4 and filing estimated taxes?

Post by Joel » Sun Jan 29, 2017 8:52 pm

Claiming exempt is probably extreme, but at what point do people decide it's easier to just pay estimated taxes instead of fiddling with their withholdings?

Married 2 isn't nearly enough withheld as a two income household, and it seems like just paying estimated taxes would be a lot easier than messing around wth it.
My investment policy statement: https://www.bogleheads.org/forum/viewtopic.php?t=190093

livesoft
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Re: Claiming Exempt on W4 and filing estimated taxes?

Post by livesoft » Sun Jan 29, 2017 9:00 pm

Joel wrote:Married 2 isn't nearly enough withheld as a two income household, and it seems like just paying estimated taxes would be a lot easier than messing around wth it.
So don't mess around and put a number on Line 6 of your W-4.
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Spirit Rider
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Re: Claiming Exempt on W4 and filing estimated taxes?

Post by Spirit Rider » Sun Jan 29, 2017 9:41 pm

Joel wrote:Claiming exempt is probably extreme, but at what point do people decide it's easier to just pay estimated taxes instead of fiddling with their withholdings?
It is one thing to claim legitimate withholding and then add estimated tax payments. It is quite another to claim illegitimate extra allowances to minimize your withholding and then make extra estimated tax payments to compensate.

Will the IRS catch you at this if you don't have an underpayment situation, maybe not. However, the consequences of being found to be manipulating your withholding is unpleasant.

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mhc
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Re: Claiming Exempt on W4 and filing estimated taxes?

Post by mhc » Mon Jan 30, 2017 9:27 am

I learned my lesson about 15 years ago playing with withholdings. I am on an IRS blacklist for the rest of my life unless Congress changes the law. Not a big deal, but I have to jump through a few extra hoops to change my W-4.

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