Is it Possible to Avoid Tax Withholding?
- Thread starter joost
- Start date
Choose exempt on your W4 with your employer then just pay in full by tax day.
They still want you to pay quarterly and try to penalize you if you don't. Just sayin'
The penalty interest rate is pretty low, so if a person does pay late, it's not much of an increase. However, it is probably enough to cancel any interest you could earn by holding onto the money yourself.
I can imagine a situation where having the money available could allow you to take advantage of a business opportunity, or other large cost savings that would fully justify the interest expense. For example, delaying your tax payment and then paying the late fee would cost much less than borrowing the same amount on a 20% credit card and paying it off at the end of the year.
They cannot penalize you if you pay all taxes owed by tax day for the prior tax year.
Start a business and write a bunch of things off. I got back $30k last year and used it to purchase my excavator.
I have no problem loosing money on my excavation business, and it helps reduce my tax burden from my 9-5 job. Obviously this only works for a few years, but I will have all the equipment that I could sell if I want.
I have no problem loosing money on my excavation business, and it helps reduce my tax burden from my 9-5 job. Obviously this only works for a few years, but I will have all the equipment that I could sell if I want.
You cannot, you can choose different depreciation schedules, but if you write it off all at once, you have to pay back the taxes on a prorated basis. So if you sell it after 2 years, you will need to pay back 5/7 of the original taxes that you wrote off.
After 7 years you can sell and not owe taxes.
At least this is my understanding, I am by no means a tax expert, but I have asked a lot of questions of tax professionals.
MtnMan is correct. Start a business.
1. Form it. I recommend Delaware (S Corp), Wyoming, or New Mexico (LLC). They are cheap to set up and easy to maintain. Single person LLCs are very very common
2 Apply for an EIN number Again its easy and free
3. Take your articles of incorporation (that are issued by the state you register in), and your EIN to a bank and open a business checking account. 4. Start using the business account for as many "business expenses" as possible.
Even if you're a W-2 wage only you can and should do this as well*
*You should get away from working for other people (aka creating equity wealth for them instead of yourself) anyway...but thats another topic
1. Form it. I recommend Delaware (S Corp), Wyoming, or New Mexico (LLC). They are cheap to set up and easy to maintain. Single person LLCs are very very common
2 Apply for an EIN number Again its easy and free
3. Take your articles of incorporation (that are issued by the state you register in), and your EIN to a bank and open a business checking account. 4. Start using the business account for as many "business expenses" as possible.
Even if you're a W-2 wage only you can and should do this as well*
*You should get away from working for other people (aka creating equity wealth for them instead of yourself) anyway...but thats another topic
Topic No. 306, Penalty for Underpayment of Estimated Tax | Internal Revenue Service
Topic No. 306, Penalty for Underpayment of Estimated Tax
I used to think taxes were due on April 15. They are not.
I once tried what you are suggesting, and it worked well for a while. The IRS gives you some leeway, particularly as long as your income is increasing and the amount of withholding is increasing each year. But then one day you get hit with a big penalty and interest. Keep in mind they probably won't do this for several years so the interest compounds.
Bottom line: Not a good idea. Pay them now, whatever use you had for the money for a few short months can wait.
What can you do instead? Tell your employer to withhold less taxes. There is a form for this. Or instead of wages / earned income try to earn money in other ways (business dividends, rents, etc.)
Tax on income is due throughout the year as you earn it.
Whether this is legal or not, it gives the occasion for the power brokers to accuse you, or catch up to you with various supposed violations. And we aren't the people who hold the power, nor are we the appointed judges. It gets old when people insist on technicalities, when the marginal benefit of testing the powers is not that large. There are other ways. Also, remember Irwin Schiff (Peter's dad)? How'd the "law" and his principles work out for him? Rotting in jail, he died. If you're going to die, at least be a real martyr, not someone who argues about how much money you should or shouldn't have to pay, that you could afford all the while. When the tax revolt comes, remember, that's when you judge its principled worthiness to object, just as the American founders did. They didn't do it until the group (majority of elites, etc) of people all agreed to do it, together.