sethb[at]panix.com (Seth Breidbart) wrote:

- quote -

Now that I think about it, I don't see why they *ever* would
have cared much about the allowances. As long as you aren't
underwithheld, what's the problem? And if you *are*
underwithheld, there's a specific penalty that you have to
pay.

The only problem would be taxpayers who are underwithheld
and also don't pay their tax return on time, so the feds
never get the full amount or the penalty.

--
Barry Margolin, barmar[at]alum.mit.edu
Arlington, MA
*** PLEASE don't copy me on replies, I'll read them in the group ***

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Barry Margolin <barmar[at]alum.mit.edu> wrote:
- quote -

At one time, they sometimes paid attention to the number of
exemptions filed on a W-4. They could (and I believe
sometimes did) tell the employer to use 1 exemption, if they
felt the employee was claiming too many.

Apparently that's no longer the case (since they don't even
get told about the W-4's, unless perhaps they use the
employer's tax filings to get the information they want).

Seth

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Barry Margolin wrote:

- quote -

It's worth noting that IRS doesn't review paper filings any
more than they have the staffing to stare at computer
screens for all the efiles. Meaning they don't at all, with
125 million 1040 filings alone, except for the "rejects" on
math and similar stuff. Out of one computer program or
another, actual compliance workload is selected by the
computer, meaning a small fraction of the filings, hopefully
delivered in $$ priority order and according to a compliance
plan the fiscal year.

Fred F.

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cagauss wrote:

- quote -

That's what the W-4 (and Pub 505) worksheets are for,
determining withholding allowances based on your situation.
What is your definition of a "standard situation"?

- quote -

You have just given a definition of the calculator and/or
withholding tables in Pub 15, which your employer can use to
determine the amount to withhold. The only variable (for a
particular employee situation) is the number of withholding
allowances claimed, so that is where you make the changes.
Since you are a "two-earner" family, it is important to take
both incomes into account -- and claim the appropriate total
allowances.

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sethb[at]panix.com (Seth Breidbart) wrote:
- quote -

Which is my point. The allowances might have triggered
special processing, they looked at your return, saw that it
was bog-standard, and had no reason to contact you.

If there's nothing funny on your return, you don't need to
worry much about "audit triggers".

--
Barry Margolin, barmar[at]alum.mit.edu
Arlington, MA
*** PLEASE don't copy me on replies, I'll read them in the group ***

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Barry Margolin <barmar[at]alum.mit.edu> wrote:
- quote -

What I wrote was:

Or not. I've claimed over 14 (I don't remember exact numbers)
with nothing happening. (At some companies I'm sure I'd have
been told if the IRS even asked about it.)

I don't know where the middle got dropped.

- quote -

Not much.

- quote -

The return? That was bog-standard. W2 income, some stock
trades, interest, deductions for state taxes, mortgage, and
charity, and that was about it. The issue was claiming lots
of exemptions on the W-4.

Seth

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- quote -

That requirement was eliminated about a year ago. The employer
is no longer required to send copies of any W-4 forms to the IRS.

References:
http://www.irs.gov/faqs/faq-kw206.html (last item)
http://www.irs.gov/individuals/artic...139412,00.html
http://www.irs.gov/taxtopics/tc753.html (4th paragraph)
http://www.irs.gov/newsroom/article/...137840,00.html
http://www.irs.gov/irb/2005-19_IRB/ar11.html

Bob Sandler

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Per new Regs, employers are no longer required to notify the
IRS just because of the number of allowances claimed on a
W-4. They only need to send it in if requested by a letter
from the IRS. See Pub 15, p. 15, and IRB 2005-19, p. 1000.

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The estimators available from the IRS don't help much. They
don't calculate your withholding. They only attempt to
guide you in coming up with a number of allowances, and
these are only useful for standard situations. I need a
calculator that an employer would use to calculate how much
should be withheld from a paycheck, given marital status,
taxable salary, salary frequency (semi-monthly, etc), and
number of allowances claimed on W-4.

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cagauss wrote:

- quote -

Your employer has not read the current Pub 15, Employer's
Tax Guide, as sending IRS certain W-4s like that is no
longer required. When it was required, it was not for the
purpose of finding prior year returns to audit, but about
egregious nonfiler cases and/or criminal activity.

However, there remains a $500 civil penalty for claiming
more allowances than IRS rules allow. There is also a
theoretical criminal sanction, since Form W-4 is signed
under penalty of perjury. Form W-4 contains a short-form
computation of max allowances. IRS Pub 505 has an expanded
computation.

Fred F.

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sethb[at]panix.com (Seth Breidbart) wrote:

- quote -

Did you mean to write "the IRS NEVER asked about it"? What
does that prove? They may have examined the return more
closely without contacting you directly. Was there
something suspicious on the return that you're sure they
would have noticed if they looked closely?

- quote -

If everything on the return is legit, you'll probably never
hear from them.

--
Barry Margolin, barmar[at]alum.mit.edu
Arlington, MA
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thng <Kylepro[at]gmail.com> wrote:

- quote -

Or not. I've claimed over 14 (I don't remember exact numbers)
the IRS even asked about it.)

The claim was legitimate, of course, and I got a small refund
at the end of the year.

Seth

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claiming 18 will likely make someone look closely at you.

so, the IRS made a handy little tool to figure out your
withholding:

http://www.irs.gov/individuals/artic...=96196,00.html

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cagauss <fdashiell[at]comcast.net> wrote:

- quote -

The correct figure is if you claim More Than 10, not 10 or more,
they have to report, but can continue to withhold until the IRS
tells themn differently. If the IRS decides to look into this,
there;s a good chance they will ask you to show cause why you
should not have your withholdiong allowances reduced to zero, and
then you submit the evidence. Or they might not do anything.

They do not publish their audit criteria, but simly increasing
allowances might not be an audit trigger.

- quote -

Just use the estimator built into Form W-4.

__
Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH

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The combined Federal withholding from my wife's any my
paychecks will be way over our tax for 2006 if we keep going
at our current levels. We decided that we would keep hers
unchanged and reduce the withholding from my salary by
submitting a new W-4 to my employer. The trouble is, I will
need a large number of allowances to achieve the desired
amount so that we won't overpay our Federal taxes for the
year.

My employer said if I go over 9 allowances they have to
report it to the IRS. Is that a bad thing? Will it
increase the chances of an audit of a prior year's return?
I generally would prefer to not draw the IRS attention for
anything, but this is just a general fear. Is there a max
on the number of allowances I can claim on W-4? I think I
need something like 18 or so to make the withholding come
out right at the end of the year. Is there an online
calculator somewhere that I can put in my salary and W-4
data, and it will calculate my withholding?

Thanks,

.... Fred

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