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exempt but add an amount for witholding

Is it legal to claim exempt, but set an amount for withholding? Rather than claiming married 2, or single 0, etc.,  can you claim exempt and set an amount to have taken out of your check under section 4c Extra Withholding on federal forms.  For example, Exempt, and 500 in section 4c for the amount to be taken out. technically you are still reporting and paying taxes that way, just not sure if it is legal to do.

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8 Replies
KochuK
Employee Tax Expert

exempt but add an amount for witholding

Hi curiousgeorge6, thanks for posting the question.

 

Based on W-4 2023 General Instructions,  "Exemption from withholding":

Quote

To claim exemption from withholding, certify that you meet both of the conditions above by writing “Exempt” on Form W-4 in the space below Step 4(c). Then, complete Steps 1(a), 1(b), and 5. Do not complete any other steps.

Unquote

 

Therefore, writing "Exempt" and filling out Step 4 (c) on the same form inherently contradict itself. Recommend doing one or the other.

 

Hope this helps. Thank you.

Kochu Kitty

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exempt but add an amount for witholding

Do not claim exempt unless you are truly legally exempt for some reason.

 

The W-4 is meant to be self-adjusting.  If you get paid more, more is automatically withheld and if you get paid less, less is automatically withheld.  If you are finding you have too large a refund (too much withheld) or owe too much (too little withheld) it is best to follow the instructions using all the worksheets on all 4 pages to figure out what you should claim.  You can also use the IRS web site calculator to enter your year to date tax info and the web site will recommend how to file a W-2 for the rest of the year. 

https://www.irs.gov/individuals/tax-withholding-estimator

exempt but add an amount for witholding

Basically if you choose the SINGLE filing status option on the W-4  AND  you claim no dependents on line 3  AND you still don't have enough being withheld THEN you will use line 4C to have an additional amount withheld  ON TOP OF what is already being withheld... you do not claim exempt + line 4C. 

exempt but add an amount for witholding

Thank you. I’m basically trying to avoid having too much taken out. I work shift work and overtime, and they take out way too much when we work overtime. Just trying to break even is all. I’ve been filing exempt and setting a fixed amount taken out under line 4c, because I couldn’t find anything that said I legally couldn’t other than it’s not recommended and could face penalties. But I’m still paying taxes. 

exempt but add an amount for witholding

@curiousgeorge6  

If your employer will process a W-4 that both claims exempt and asks for a fixed amount, then your only significant issue is to monitor your tax situation throughout the year.  Every couple of months, you will need to look at your gross income, your tax withholding, and prepare an estimated tax return to make sure you are on track. If you owe more than $1000 when you file your tax return, you can be assessed underpayment penalties and interest even if you pay in full when you file.

exempt but add an amount for witholding

Thank you so much, this was kind of what I was looking for. I figured it’s between the IRS and I, not my employer to tell me, if i couldn’t find documentation stating I COULDN’T do this. I still end up paying, in fact I’m paying extra on state, and even a little over on federal. If I get $87 back I’m happy. I just don’t want to owe and I don’t want 6k back. I’d rather break even and I feel it’s a better way to control it as long as I pay attention to it. 

exempt but add an amount for witholding

@curiousgeorge6  

Generally, your withholding is a matter between you and the IRS, but I believe the IRS can penalize an employer if they processed a request for exemption without doing due diligence that the person really is exempt.  However, you aren’t really asking to be exempt, you are asking for a specific dollar amount. That just means that you have to stay on top of your own tax payments instead of using the variable tax tables.

exempt but add an amount for witholding

Thank you! Otherwise it would be a letter from the IRS to the employer, and they would have to notify me, correct? And allow me the opportunity to correct a W4 should that arise? 

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