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Please explain in detail the legal process that allows you to opt out of paying your payroll taxes as you go and instead pay after the tax year has completed.
by sidewndr46 3y ago
Please explain in detail the legal process that allows you to opt out of paying your payroll taxes as you go and instead pay after the tax year has completed.
- deleted 3y ago[deleted]
- bandyaboot 3y agoTo dispense with the unnecessary snark, you can claim exemption from withholding, but only if you had no tax liability in the previous tax year and you expect the same to be true of the current tax year.
- mmcclure 3y agoAn individual can't ever opt out of payroll taxes, that's an employer's responsibility. Income tax withholding, however, can be adjusted with a W-4. As others have mentioned, though, anyone making a reasonable income is going to have to pay estimated quarterly installments or get angry letters. Setting aside the 90% thing, to your original point, paying taxes is not a voluntary thing. There is, however, at least some flexibility in how you pay them. The flip side of this is: who cares, withholding is actually fine. For a vast majority of people, estimated withholdings is pretty close, and the few percentage points one might earn on a $1k refund in the meantime just isn't worth it. In my opinion, the best easy tax situation would be that at the end of the year we can skip (most of) the filing step and I either get a check or a bill.
- mmcclure 3y agoEdit/delete window is past, so mea culpa for anyone else in this thread: sibling comment from bandyaboot is right on the limited path to exemption. I was mistaken on how much withholding flexibility there was for employees (aside from increasing it), and how much W-4 allowances could realistically (or, rather, legally) have an impact. https://www.irs.gov/publications/p505 https://www.irs.gov/publications/p505