How to I stop having taxes taken out of my paycheck?

Question

I want to temporarily stop having the taxes taken out of my check and use that money to catch up on bills and improve my credit. Everything is behind, which is giving me horrible credit ratings, but its not a huge amount of money, and I should be able to get back on track within 3 to 4 months. What do i need to put on the W-4 to make this change?

Answer 1

You are probably thinking of increasing the number of your dependents, which, will, of course, reduce the AMOUNT of taxes taken out of your paycheck. Many people think this is legal since they then report the correct number of dependents when they do their income tax in April. Wrong, it's still claiming an illegal number of dependents.

I'm sure that won't dissuade you or anyone else from doing it, but the payroll clerk who figures up your check each pay period will go bananas over constant changes. Have fun.

Answer 2

The more dependants you claim the less taxes you have taken out....if you actually had 10 kids you would be tax exepmt! You can change this at any time you want on your paycheck.

Answer 3

You can reduce the amount taken as withholding by making a change on your W-4 form.  Depending on your tax situation this could be done with little more problem than a smaller refund at the end of the year.  In other circumstances this could mean a really large amount due at the end of the year to the IRS.  You should never claim exempt as there is a penalty for doing so if you wind up owing tax.  

Answer 4

You can reduce taxes by claiming more exemptions.  Conceivably, you could claim "exempt" on your W-4, and then you would have no taxes withheld.

But you're playing with fire.  This is not much different from getting a new credit card to pay off an existing debt on another card.  It's very likely that in 3-4 months, you will conveniently "forget" to reduce your exemptions and start paying higher taxes.  And if you claim "exempt" when legally you are not so, you are guilty of fraud, even if you have paid all your taxes by the end of the year.

Don't forget that from the IRS's standpoint, a tax deferral (which is what you're hoping for here) is a loss of tax revenue.  That's because every time you delay paying taxes, you are causing the federal fisc to lose out on interest it could have earned on the taxes you were supposed to be paying.  The IRS isn't real happy about that.  

Answer 5

L B sorry to say that I don't think that you can avoid giving Uncle Sam his cut. You are most definitely going to give up something. But, there might be a way out there that I don't know about, because, believe me, I have tried and I have failed repeatedly.