In 2009 I may leave my job early on in the year and not work again during that year. I'm trying to figure out what methods I can use to prevent having way too much tax withheld. The 2 methods I can come up with are:1) Ask my employer to use the part year method for withholding. I work for a large company with plenty of bureaucracy so I expect I'd just hear laughter on the other end of my phone if I tried this one.2) Manipulate my W-4 exemptions to lower the amount withheld to be where I expect it. This might be tricky to calculate, and I'm not quite sure if it is allowed. To use an alternative method of calculating exemptions, publication 505 says that "it must take into account only the items of income, adjustments to income, deductions, and tax credits that are taken into account on Form W-4." W-4 doesn't have any place for income so I don't really know how to interpret this.Are there any other methods that can be used? I'm assuming once it has been withheld there is no way to request a refund until the next january. I would recommend that you just let things fall where they may. You are right to think that your first method will probably be rejected. Your second method will work, but still should be avoided. In order to adjust your withholding allowances "correctly", you should complete the worksheet that is part of the full W-4. (Many employers only give you the first page of the W-4). The danger is that should you work longer than you anticipate when you prepare the W-4, you are likely to be significantly underwithheld and subject to penalties. Unless you're the type of person who doesn't mind continually reviewing your status, you're probably better off overwithholding somewhat and getting the refund the following year.Ira
Best Of |
Favorites & Replies |
Start a New Board |
My Fool |
BATS data provided in real-time. NYSE, NASDAQ and NYSEMKT data delayed 15 minutes.
Real-Time prices provided by BATS. M