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Thread: IRS Question

  1. #1
    Busyman™'s Avatar Use Logic Or STFU!
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    Is it illegal to withhold ALL of my federal and state taxes from work?

    I wanna withhold ALL federal and state taxes (of course I know I can't withhold social security, etc) and immediately place them in a high yield savings account.

    I would then make the 5.5% on it and pay my income tax on my own (including of course the income on the interest).

    I don't want a tax refund at all. I know that, for many, the best way is to tweak your exemptions so you owe nothing (or close to it) but I don't care about owing since the money won't be touched or risked for anything.

    I basically want to owe but without penalty. Someone told me that in Maryland, taxes must be paid every quarter.

    Any help would be greatly appreciated along with points to appropriate references of where you got your information.

    I hate going to the taxman.
    Last edited by Busyman™; 03-08-2007 at 04:25 AM.

  2. The Drawing Room   -   #2
    vidcc's Avatar there is no god
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    I doubt it (you're not self employed are you?), it all depends on what deposit rule applies, but I would say that despite your hatred for the tax man he is the best person to ask.

    Edit: by I doubt it I mean I doubt you can do it.
    Last edited by vidcc; 03-08-2007 at 08:11 PM. Reason: spelling

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  3. The Drawing Room   -   #3
    100%'s Avatar ╚════╩═╬════╝
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    Quote Originally Posted by Busyman™ View Post
    Is it illegal to withhold ALL of my federal and state taxes from work?
    Yes (Officially)

  4. The Drawing Room   -   #4
    SHUVT's Avatar Poster BT Rep: +30BT Rep +30BT Rep +30BT Rep +30BT Rep +30BT Rep +30
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    You can depending on what you do for a living. You could always claim 12 exemptions and invest the funds into a high yield account. It just depends on the amount of money you would be able to put away as well. If it is a small amount it would not be worth it, but if you are making more than $130,000 it might be a option. Somewhere around the 130K mark you step into the next tax bracket and will be hit harder on what they take.
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  5. The Drawing Room   -   #5
    Busyman™'s Avatar Use Logic Or STFU!
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    Quote Originally Posted by SHUVT View Post
    You can depending on what you do for a living. You could always claim 12 exemptions and invest the funds into a high yield account. It just depends on the amount of money you would be able to put away as well. If it is a small amount it would not be worth it, but if you are making more than $130,000 it might be a option. Somewhere around the 130K mark you step into the next tax bracket and will be hit harder on what they take.
    How can you say it's not worth it?

    Scenario 1 = all proper taxes are taken out every pay check, I do taxes and get a refund of $7000.

    Scenario 2 = exemptions are done properly so I either owe next to nothing and receive no refund, or receive a small refund

    Scenario 3 = taxes are not taken out during the year, all taxes are invested at 5.5%, I owe at the end of the year but made interest. Let's say I owe $20,000 in taxes, I just made (I know the numbers are not correct due to daily compounding and the fact that the entire amount would not be there from Jan. 1) $1100 (minus the tax on that too)

  6. The Drawing Room   -   #6
    weenden's Avatar Poster BT Rep: +30BT Rep +30BT Rep +30BT Rep +30BT Rep +30BT Rep +30
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    well if you can do it that way and make money but the money you make will have taxes coming out of that too and you still have to pay the tax's owed too it sounds good but a lot of paper work is involved
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