carlip Posted June 6, 2013 Share Posted June 6, 2013 Today at work I decided it is time to set aside my fears of government and follow my growing moral compass. I went into the office of our human resource manager and got the W-4 form. (For non Americans, it is a "mandatory" form to declare automatic withholdings for income tax purposes.) After I filled it out and gave it back to him he looked puzzled as to why I thought I was able to claim exempt. He said " sometimes I wish I could get inside your head". (Sometimes I wish I could get out of it and away from the ideas that began after Ron Paul awoke the hungry giant.) I told him taxation is theft, he replied "I know it is!". So I pointed out this fact to him, "how will they put you in a jail if they can't afford to keep it up if no one paid taxes?" I think he was blown away, he sort of chuckled and I left, but maybe I can slowly chip away with tidbits of liberty and subtle anarchy. It will be my first "conversion" that is not a friend, who are all familiar with liberty to some degree. So here I am claiming exempt from federal income tax. I still must pay state and social security, but a matador only duels one bill at a time. I am wondering what the response will be from the government agents. I plan to point out that Steve miller agreed that taxes are voluntary during a senate briefing. So he was in front of congressmen, on tv and under oath. I see no reason to consider myself to have a tax liability as stated on the W-4 form for claiming exempt. I am not lying about this belief. The elected government officials who appointed this man are our leaders after all, they know best. I am curious to know if anyone has tried this before, if so what were the results? Link to comment Share on other sites More sharing options...
Guest darkskyabove Posted June 6, 2013 Share Posted June 6, 2013 Done it for years. Understand, you're only claiming exempt from "withholding". If, at the end of the tax year in question, your income breaches any "pay up" bracket, you will be liable to pay the tax. The advantage comes from having "your" money now, rather than waiting to see if you qualify for a refund on your 1040. If you take the money that would have been withheld, and invest it, you can earn interest on it that would be unavailable if the Feds "held" it for you. Although, you then have might have to pay tax on the interest earned. I used to try telling everyone I could about this "loophole" for the middle-class, but after all the glazed stares, I gave up. Link to comment Share on other sites More sharing options...
Existing Alternatives Posted June 7, 2013 Share Posted June 7, 2013 There is also a difference between claiming to be exempt and being exempt. It is up to the government to grant you the exemption. Oh, and it is also a red flag as far as audit targeting is concerned. Just so you know… Link to comment Share on other sites More sharing options...
Guest darkskyabove Posted June 7, 2013 Share Posted June 7, 2013 Oh, and it is also a red flag as far as audit targeting is concerned. Just so you know… Good point. My case is a fairly simple one. I am not phobic about interpreting the tax code that applies to me, and I can handle the math. I was in a position to forecast my potential earnings for the year and predict my tax burden to be minimal. If the sum owed were to be significant, it would require fiscal responsibility to set aside money to pay the bill. No complications like itemized deductions, no offshore accounts, etc. And if I were to be audited my W-2 would match my 1040. All that being said, it's probably not a good idea to mess with the IRS unless you truly understand your position. Link to comment Share on other sites More sharing options...
tasmlab Posted June 10, 2013 Share Posted June 10, 2013 I have three corporations and my tax return is typically over 100 pages long. I have really minimal withholdings and always have a big bill at year's end (I underpaid a little over $75K this year to fed and state, really feels shitty getting the bill, particularly with my worldview). You'll probably just get some nasty mail which is scary at first. The letters are pretty stark, like they come from the past and there is usually intimidating language. They told me last year that I couldn't claim I was married even though I am. I had to spend an hour on the phone with them, where they are just human, to correct the mistake. You may be able to invest the money and be better off than withholdings. They will penalize you at somepoint if your tax bill is 10% off of your withholdings. The penalties aren't much and they don't take affect until the second year you commit the violations. All in all, I'd say roll the dice and see what happens. You might find it not worth the extra mail and fees and such. Link to comment Share on other sites More sharing options...
Guest darkskyabove Posted June 10, 2013 Share Posted June 10, 2013 Whoa Nellie! tasmlab, your tax situation goes far beyond the simplicity of claiming exempt for personal income tax and KNOWING that your tax burden will be in the hundreds of dollars at the most. Even though I can advocate, from my armchair accountant position, minimizing tax payments in whatever form, I cannot, in good conscience, promote hazardous guesses at tax liability. The only people to whom I can recommend the possibility of claiming exempt are those who will earn less than about $24K. At this level one's tax liability is prone to be in the less than $1K region, usually more like $100. Would you rather get a tax refund of $2K, or have that money earning interest throughout the year? Or have it available to spend as you please? What I am promoting is, for those within the criteria, to file exempt, invest the money that would have been taken, plan to cover your tax liability, and reap the (small though it is) benefit. Applying this concept to higher income brackets, and corporate or business taxes, does not appear prudent. Such is life, death, and taxes! Link to comment Share on other sites More sharing options...
tasmlab Posted June 11, 2013 Share Posted June 11, 2013 There's sort of two aspects to this. One is personal financial planning and the other is sticking it to man. Neither have a really significant effect, especially if someone is making an average American salary. And probably not worth the hassle. This said, withholdings are AWEFUL. They obfuscate what people pay and all of the nonsense itemizing on your payslip is BS too. When you run your own business you don't line item SS, Fica, Medi-stuff, etc., you just write one big dumb check to the US Treasury four times a year (or just once, if you are like me). It all goes into the same pot. If everyone had to write a check for their taxes each month for the whole sum and mail it in, people - even lefties - would be wholesale bullshit with paying taxes. People's moral views of government would just totally contort I bet because the expense is nauseating. But withholdings make it all seem to disappear. Terrible! Link to comment Share on other sites More sharing options...
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