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Question: are there potential penalties for overwithholding? If I don't modify my W-4, the IRS withholding calculator estimates I will get a refund and, when I adjust the result for the amount of capital losses I realized in the past five weeks by moving my investments, it looks like I may receive a $1,598 federal refund when I file my Year 2004 tax returns.

Actually, if I don't get hit by AMT, it is possible I will have 7 years of reduced taxes because of the amount of capital losses.

This isn't like I am intentionally over-withholding my state income taxes to try to use it to further decrease my federal taxes, which I think is where my tax preparer got bit by penalties, but I'll have to ask more about this when I meet with her this Friday.
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