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Lets say somebody makes $20,000 per month. But they work 6 months a year filing single.
So if you worked 12 months a year you would make $240,000 (62,000 Federal tax owed, 33% bracket, $5166 per month to pay tax )
However, this person works 6 months a year making $120,000 (25,000 Federal owed, 28% bracket, $4166 per month to pay tax)
When federal tax is taken out of each pay check in the 6 month situation would the federal tax be taken from each check like you are going to make $240,000 per year?
Would they be setting up for a massive refund working 6 months a year?
Is it possible to claim a high exemption...say 10 to reduce the amount of federal tax from each check?
However, at the end of the tax year you would be very close to owing zero in taxes.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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The IRS won't care how many exemptions you claim as long as you don't owe a balance at the end of the year. If you come up short they can add penalties to the amount due for under-withholding. ny good tax guy can help you calculate the correct number of exemptions to do on the W-4 so that you get a small refund at tax time.
You know, I think I would be asking a really good accountant these kinds of questions, rather than a bunch of yahoos on a message board. Because saying, "CPG35223 thought I was in pretty good shape doing that" won't cut it in tax court.
You know, I think I would be asking a really good accountant these kinds of questions, rather than a bunch of yahoos on a message board. Because saying, "CPG35223 thought I was in pretty good shape doing that" won't cut it in tax court.
True - but nothing the OP does with exemptions is gonna put him in tax court unless he pulls a Wesley Snipes.
Sales people often have very inconsistent income - big commission checks in the fourth quarter for example. So it is perfectly reasonable to adjust exemptions.
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