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HomeOff Topics › How to claim 'Exempt' question
04-06-2010 01:44 AM  8 years agoPost 1
Tommy Z

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Lubbock, Texas

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Hey guys,

For the last 2 years, I've been working for the same company. Both years I've ended up owing a little money in taxes. I go to school full time and everyone keeps telling me I need to claim 'exempt' on my W4. I guess I don't know how to do that. I have always just put a 'zero' for everything and gotten money back from previous places I worked.
Could anyone tell me how or what I need to do, so that I'm more likely to end up not owing anything, or maybe getting a little back?

-Tommy Boy

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04-06-2010 02:25 AM  8 years agoPost 2
drdot

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So. California, Orange County.

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fwiw..

Be careful with exempt....Means NOTHING is taken out in taxes.....Go zero on all deductions, divide the amount you owed by 10, have that amount additionally taken out...Should break even, or mebbe get a $ back...

John.

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04-06-2010 02:25 AM  8 years agoPost 3
jcrack_corn

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End of Time

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dont take this as financial advice.

Yes, you are very likely below the poverty level as a working student....it is in YOUR best interest to "owe a little" each year, it is much better than getting a tax check each year.

Anyway, on your w-4 just write "exempt" where you are supposed to claim exemptions....or you could claim 10 (or 99) exemptions.....

i dont believe i ever actually owed any taxes when working as a student....

(remember you get a personal exemption and standard deduction).

------------------------------------------------------------------
do it inverted
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04-06-2010 06:42 AM  8 years agoPost 4
fla heli boy

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cape coral, florida

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bad advice. Though it's silly to let the government hold your money for a year, claiming exempt means (as was stated above), that you expect to owe NOTHING at the end of the year. Well, you always owe something, even if it's just social security and FICA or Medicaid. This means at the end of the year, you'll be writing them a tidy little check, which is OK if you put the money away every week that should have been with-held. I did this same thing once when I was young and I learned my lesson. Better off to just put "1" in the with-holding line on your payroll form.

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04-06-2010 07:19 AM  8 years agoPost 5
Tommy Z

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Lubbock, Texas

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it is in YOUR best interest to "owe a little" each year, it is much better than getting a tax check each year.
Can you please explain? I'm not trying to be rude, I just don't understand why.

-Tommy Boy

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04-06-2010 12:08 PM  8 years agoPost 6
Dblex

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Texas

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Tommy, last April the US passed a bill "Work to pay" tax credit. If you were making less than $20,000 (or something like that) and you were claiming 0, Obama thought it would be best if the govt took less out of your check to stimulate the economy. For example:

if you made $10,000 and claimed 0, the usual deduction is around 26% overall. Taxes, medicare, ect

But now that this bill Passed last year, if you made $10,000 the Govt only took about 5% in taxes and thought it was best for you to keep the other 21% and spend it in the economy. What they didnt tell you was at the end of the year you were going to pay back that 21% when you filed.

SO, it doesnt matter if you filed 0 dependents, they are taking less out of your check to help stimulate things.

I know, because my wife is in the Navy reserves and made less than $20,000 and well, the IRS took a tail boom and never saw daylight!

Oh by the way, these are the same things the govt didnt tell you about the health care bill. Wait til you see how your gonna pay for that!

Highly Medicated for your protection......

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04-06-2010 12:43 PM  8 years agoPost 7
ChrisMoore

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Bay Village, OH

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Don't forget that you can get a huge tax credit through the American Opportunity Credit for qualified education expenses

http://www.irs.gov/newsroom/article...=205674,00.html

Chris. AMA 497715 IRCHA 3351

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04-06-2010 02:04 PM  8 years agoPost 8
EvoFlight50

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Southbury, CT

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Did you get your taxes done by someone who knows what they are doing? Seems strange that you are a full time student and you owe money. They have a couple refundable tax credits for students that should have been way more than what you owe.

Of course I'm saying that with very little info.

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04-06-2010 02:34 PM  8 years agoPost 9
Super Phreek

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Sunny Lancaster, California

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Can you please explain? I'm not trying to be rude, I just don't understand why.
The reason you would want to owe each year is the fact if you are due a refund, you are giving the govt a interest free loan on your money. To make things more interesting, with all of the state budget problems now; some states are holding on to their respective refund to make their bottom line.

Free loans to the govt are always a bad idea. Funny thing is, the govt loves it; reason they are quick to promote it.

Derek

Is that a 6s 5000 in your pocket,
or are you just happy to see me?

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04-06-2010 02:47 PM  8 years agoPost 10
Flying Brian

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St. Clairsville, Ohio

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Allot of this depends on what you made last year. The American opportunity credit is usually for parents that have a child in school. If your parents are claiming you then they need to be the ones taking the credit. However usually in the situations where the parents are claiming the credit, the child is pretty much depending on the parents for their financial needs outside of their tuition. If you are making too much money to get it all back, then you might be making enough to where it would be fair to claim it yourself. Either way, someone needs to be claiming this credit.

I would amend your last years return. If you've been in school for more than two years, you will be able to amend last years taxes, and the year before. The American Opp Credit, is new as of this year, and able to be claimed for the first four years of school. However, prior to this year, it was called the Hope credit, and was only to be claimed the first two years of college, then you had to take the Lifetime Learning credit, which is much less significant. The American opp credit could be worth up to, I think 2500 bucks this year.

Either way, no matter what you do, you are NOT exempt from paying taxes, as you've obviously noticed each year you've had to pay out of your pocket. And even if you don't qualify for that credit, there are lots of new credits this year, and lots of great write-offs if you know the tax laws.(I do) . As far as what you should claim, the others are right, they did take out less this year, so just to be safe always claim 0 and taking out extra wouldn't hurt, but it may not be necessary depending on what you make.

"I just don't Listen" "

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04-06-2010 10:44 PM  8 years agoPost 11
Tommy Z

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Lubbock, Texas

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Thanks guys, that was all helpful info.

-Tommy Boy

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04-06-2010 11:19 PM  8 years agoPost 12
Flying Brian

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St. Clairsville, Ohio

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So what your really trying to say is, Flying Brian, your advice was top notch,,,right?

That will be 150.00 dollars then...............

"I just don't Listen" "

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04-06-2010 11:21 PM  8 years agoPost 13
JasonJ

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North Idaho

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Yeah, my oldest sister got in a nutroll many years ago because she went exempt. They nailed her for thousands upon thousands in unpaid taxes. Definitely better to have to pay a little each year. When it comes to taxes, the right answer is to not be owed, and not have to pay. The closest you can come to 0, the better.

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04-06-2010 11:28 PM  8 years agoPost 14
2LTime

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Walworth,NY

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This will give you the official government guidelines.

http://www.irs.gov/pub/irs-pdf/fw4.pdf

Here's the official party line on what Dblex explained. Basically meaning this year may have been a fluke on you owing since you were stimulatized.

http://www.youtube.com/watch?v=qzdIElXDqhg

The more exemptions you claim, the less they will take out, and the more you will owe. Claiming exempt is akin to taking the maximum number of exemptions.
Could anyone tell me how or what I need to do, so that I'm more likely to end up not owing anything, or maybe getting a little back?
Exempt is not where you want to be.

If you can't learn to do it well, learn to enjoy doing it badly.

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