Friday, April 10, 2009

IRS Withholding Allowances

From time to time an interesting argument will surface regarding IRS withholding allowances. Some taxpayers like to get money back after filing their federal income tax returns. Others like to manipulate their withholding through their employer in an attempt to “break even” come tax time. Sometimes employees get this equation so out of balance they wind up under-withholding for years and over time end up owing the IRS a large sum of money.

In either case the most important thing for the taxpayer to understand is that the IRS debt must be paid. To get a very good understanding of how this works a taxpayer would do well to read and understand the Employee’s Withholding Allowance Certificate policy on withholding. As a tax professional I see this as one area that gets taxpayers into big trouble. The trouble starts when a taxpayer is told by a co-worker or someone else that they can increase their take home pay by reducing the amount of taxes withheld. This sets the stage for the classic problem of under withholding that ultimately gets the taxpayer in big trouble with the IRS.

Time after time I have taxpayers calling me about their tax problem only to discover that their problem stems from under withholding. With a good understanding of how this program works hopefully taxpayers can avoid getting into trouble. If you are in trouble and owe the IRS due to under withholding then please call a tax professional and get the professional care available to you.

6 comments:

Nicholas Sullivan said...

Hi! Thanks for the great information you havr provided! You have touched on crucuial points!

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darrell said...
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darrell said...
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Jensen said...

This is very interesting information. I am doing some research for a class in school. and i liked the post. do you know where I can find other information regarding this? I am finding other information on this but nothing that I can use really in my paper for my final. do you have any suggestions?

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Jensen said...

There are certainly a lot of details like that to take into consideration. That’s a great point to bring up. I offer the thoughts above as general inspiration but clearly there are questions like the one you bring up where the most important thing will be working in honest good faith.

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Darwin Smith said...

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