Tax withholdings: do I trust myself or the IRS? - Page 2

Will · 12-26-2007, 08:42 AM

Quote:

Originally Posted by TeresaMichelsen

and I'm a Ph.D. scientist, so I can handle forms and math, generally speaking).

I noticed your other post about mediation. Are you some sort of environmental consultant?

Most scientists I know work for huge corporations or universities, so I'm a bit curious at what a self-employed scientist does for a living (other than trying to take over the world).

summrs1 · 12-30-2007, 08:37 PM

Depending on your situation, it could actually be very easy to figure out what your tax bill is every year.

For example, I have a salary position, so my checks are the same every pay period. I know approximately how much my other deductions and interest will be each year. For some things I just estimate. In January, I will look at the tax information for the coming year and make adjustments to my exemptions as needed.

I try to get as close to zero as possible every year, but when estimating, I error on the side of getting a little money back.

The Honest Dollar · 12-31-2007, 05:35 AM

There are downsides to both overpaying and underpaying when it comes to tax withholdings. But the IRS makes it pretty easy to estimate the number of credits to claim when filling out your W-4; just get your last paycheck and last year's tax return and use the IRS's withholding calculator. Or you can use Kiplinger's Easy-to-Use Tax Withholding Calculator.

jasoos007 · 12-31-2007, 05:47 AM

I understand your concern on IRS, however, I think of this as a interest free saving where the money is being saved for me .of course by me ..without actually in my consciousness..It is nice to have a handsome amount of check at the end of year ..I know it goes against all the economics principles but who says saving money is all economics and no psychology...

hollyvangogh · 01-01-2008, 03:08 PM

My parents always taught me that you don't let the IRS withhold anything they'll owe you come tax time. It is like giving them an interest free loan. But I think it would be unwise to claim more than you're going to legally get in April. I'd be nervous that it would be spent or lost too.

beansac · 01-15-2008, 06:21 PM

Honestly, I wouldn't trust the IRS as far as I can throw them. And seeing as they are a giant government bureaucracy, I couldn't throw them at all.

Anthony Marrone · 01-15-2008, 07:04 PM

Quote:

Originally Posted by davoscat

I hate it when that happens. But if that's the worst thing to happen to your friend he got off sort of easy. This story sounds so detailed. Is it autobiographical?

It also reminds me of the Office Space scam where they wrote a "take a penny" software which ended up stealing tens of thousands of dollars.

The Office Space story immediately popped into my head!!! What am I gonna do with 40 subscriptions to Vibe.

Anyway, regarding the concern in this post, there are tons of online calculators that will help you determine your withholding throughout the year and how many exemptions you should claim in order to balance everything out comes tax time.

Also, if you are a State Farm customer you have free access to Turbo Tax through your online account (along the left sidebar) and should take advantage of the software to pre-calculate your taxes due in April, and set some money aside ASAP.

rstlne · 01-16-2008, 08:27 AM

I pay the minimum amount of estimated taxes I need in order to avoid underwithholding penalties. The rest of the year, the amount I put away to cover the taxes sits in an online savings account earning 4%+. Then at taxtime, I use that to pay the US Treasury and I pocket a few hundred dollars in interest. Of course, that will only work if you have the discipline not to spend the money that you've set aside for taxes. Try saving the tax money in a different account.

12-31-2007, 05:47 AM	#14
jasoos007 Junior Member Join Date: Dec 2007 Posts: 8 Reputation: (10)	look at from this point I understand your concern on IRS, however, I think of this as a interest free saving where the money is being saved for me .of course by me ..without actually in my consciousness..It is nice to have a handsome amount of check at the end of year ..I know it goes against all the economics principles but who says saving money is all economics and no psychology...

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12-30-2007, 08:37 PM	#12
summrs1 Junior Member Join Date: Dec 2007 Posts: 11 Reputation: (10)	Depending on your situation, it could actually be very easy to figure out what your tax bill is every year. For example, I have a salary position, so my checks are the same every pay period. I know approximately how much my other deductions and interest will be each year. For some things I just estimate. In January, I will look at the tax information for the coming year and make adjustments to my exemptions as needed. I try to get as close to zero as possible every year, but when estimating, I error on the side of getting a little money back.

12-31-2007, 05:35 AM	#13
The Honest Dollar Member Join Date: Dec 2007 Location: New York Posts: 90 Reputation: (63)	There are downsides to both overpaying and underpaying when it comes to tax withholdings. But the IRS makes it pretty easy to estimate the number of credits to claim when filling out your W-4; just get your last paycheck and last year's tax return and use the IRS's withholding calculator. Or you can use Kiplinger's Easy-to-Use Tax Withholding Calculator.

01-01-2008, 03:08 PM	#15
hollyvangogh Member Join Date: Dec 2007 Location: Utah Posts: 30 Reputation: (10)	My parents always taught me that you don't let the IRS withhold anything they'll owe you come tax time. It is like giving them an interest free loan. But I think it would be unwise to claim more than you're going to legally get in April. I'd be nervous that it would be spent or lost too.

01-15-2008, 06:21 PM	#16
beansac Member Join Date: Jan 2008 Location: Chicago Posts: 32 Reputation: (13)	Honestly, I wouldn't trust the IRS as far as I can throw them. And seeing as they are a giant government bureaucracy, I couldn't throw them at all.

01-16-2008, 08:27 AM	#18
rstlne Senior Member Join Date: Jan 2008 Location: New Jersey Posts: 364 Reputation: (115)	I pay the minimum amount of estimated taxes I need in order to avoid underwithholding penalties. The rest of the year, the amount I put away to cover the taxes sits in an online savings account earning 4%+. Then at taxtime, I use that to pay the US Treasury and I pocket a few hundred dollars in interest. Of course, that will only work if you have the discipline not to spend the money that you've set aside for taxes. Try saving the tax money in a different account.