I owe a lot of tyro loans (almost $200,000). Im not meddlesome in profitable off the loan or the balance.The most appropriate remuneration devise I could get was $2,000 a month. As a outcome the IRS withholds my taxation reinstate each year which comes out to about $1,500 a year. In the past I claimed grant since I was a grad tyro and done well underneath the limit in tangible income. Now im not competent to explain exemption, and there is a $500 chastisement which could be assessed if I do explain exemption. Could I explain free this year and usually compensate the $500 chastisement if assessed at the finish of 2007??? It seems cheaper afterwards the $1,500 the goverment would usually keep any way and would concede me to keep $1000 additional this year as well as carrying the make use of of my income which was with hold by out the year anyway? I usually wish to know about the TAX aspect of the issue. Yes i know all the things they can do in my state in regards to pick up of the loan.
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{ 6 comments… read them below or add one }
From the W4:
1) Last year I had a right to a refund of all federal income tax withheld because I had no tax liability and
2) This year I expect a refund of all federal income tax withheld because I expect to have no tax liability.
No, you do not qualify. Your employer may not even let you if you tried. If you fill out a false W4, they are required to withhold a “Single – 0″ (the highest rate). You may get away with claiming “9″ but who knows…..
no
You’d be liable for more than just the $500 penalty unless you made quarterly estimated payments, if you owed any significant amount of tax when you filed your return.
You’re “not interested” in paying back your loan? Why should other taxpayers pay for your schooling? Don’t you think that sounds just a little arrogant? You borrowed it, you owe it.
They can only seize your refund if you are due a refund. If you calculate your withholding to owe the IRS $5.00, there is no penalty and no refund to seize.
That said, PAY YOUR LOAN. I’m not asking you to pay mine and I don’t want to pay yours.
I would have to assume the $500 penalty would be on top of any taxes they decided you owed for that time period, so I’d suggest against it. The IRS is NOT a good thing to mess with. They can really screw you over.
Pay back the student loans. Stop leaning on the government. If you had $200K in student loans, you got some pretty good schoolin’. The government expects that you will keep your end of the bargain. So PAY YOUR TAXES and pay back your student loans. Become a productive member of society by contributing, not sliming.
That’s my opinion.
Tax Advisor.
Oh, in answer to your question, NO you can’t claim exempt because you don’t meet the simple test of OWING zero tax in the year before.