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Somewhere I remember hearing there is now a penalty for overpayment of taxes. Is that true? Are they going to hit me with it immediately? Theoretically I didn't know I was overpaying (since I'm on payroll deduction) until I filed my taxes. And I'll certainly take care of it because I'm going to have even more deductions for 2000.
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No. of Recommendations: 0
Somewhere I remember hearing there is now a penalty for overpayment of taxes. Is that true? Are they going to hit me with it immediately? Theoretically I didn't know I was overpaying (since I'm on payroll deduction) until I filed my taxes. And I'll certainly take care of it because I'm going to have even more deductions for 2000.

This rumour goes around every so often. No, there is not a penalty for overpaying but there can certainly be one for underpaying. Sure, adjust your withholding for any extra deductions you might have for 2000 but don't cut your nose off to spite your face. Try for breakeven or a slight over/under payment. Don't worry about them penalizing for overpayments. If they did, they would wind up with everyone underwithholding and they absolutely do not want that.
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No. of Recommendations: 0
This rumour goes around every so often. No, there is not a penalty for overpaying but there can certainly be one for underpaying. Sure, adjust your withholding for any extra deductions you might have for 2000 but don't cut your nose off to spite your face. Try for breakeven or a slight over/under payment. Don't worry about them penalizing for overpayments. If they did, they would wind up with everyone underwithholding and they absolutely do not want that.
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The government won't penalize you, however letting them have a loan when you could be using your money to invest is a penalty itself. I still laugh when people get excited about getting money back at the end of the year. Granted these are generally small amount but still--the thought of giving the government an interest free loan sickens me! hehe.

Eric B.
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