Comments on: Reduce your refund, but not by too much http://www.mightybargainhunter.com/2006/02/22/reduce-your-refund-but-not-by-too-much/ Personal finance, commentary, and spending less the easy way Fri, 19 Mar 2010 14:24:44 -0400 http://wordpress.org/?v=2.8.6 hourly 1 By: mbhunter http://www.mightybargainhunter.com/2006/02/22/reduce-your-refund-but-not-by-too-much/comment-page-1/#comment-726 mbhunter Thu, 23 Feb 2006 04:28:12 +0000 http://mightybargainhunter.com/2006/02/22/reduce-your-refund-but-not-by-too-much/#comment-726 Thanks for the comments FMF and Lori! Lori, you can do that but you'll be paying 6% to 7% penalty on the money you should have been paying to Uncle Sam. Isn't it great -- you can overpay and he pays you back without interest, but if you underpay, you owe him interest! There are some exceptions, but I wouldn't try withholding nothing! The government does an excellent job of collecting its payroll taxes -- better than just about any other kind of tax. The government came up with withholding because it was a surefire way to get their "fair" share -- before you ever had a chance to spend it away! The relevant document is <a rel="nofollow" href="http://www.irs.gov/pub/irs-pdf/p505.pdf"> IRS Publication 505</a>. It applies to employees as well as the self-employed. Thanks for the comments FMF and Lori!

Lori, you can do that but you’ll be paying 6% to 7% penalty on the money you should have been paying to Uncle Sam. Isn’t it great — you can overpay and he pays you back without interest, but if you underpay, you owe him interest! There are some exceptions, but I wouldn’t try withholding nothing!

The government does an excellent job of collecting its payroll taxes — better than just about any other kind of tax. The government came up with withholding because it was a surefire way to get their “fair” share — before you ever had a chance to spend it away!

The relevant document is IRS Publication 505. It applies to employees as well as the self-employed.

]]> By: FMF http://www.mightybargainhunter.com/2006/02/22/reduce-your-refund-but-not-by-too-much/comment-page-1/#comment-724 FMF Wed, 22 Feb 2006 14:31:49 +0000 http://mightybargainhunter.com/2006/02/22/reduce-your-refund-but-not-by-too-much/#comment-724 I agree. You don't want to let them use your money -- but it's worse to have to pay a penalty. I agree. You don’t want to let them use your money — but it’s worse to have to pay a penalty.

]]> By: Lori http://www.mightybargainhunter.com/2006/02/22/reduce-your-refund-but-not-by-too-much/comment-page-1/#comment-723 Lori Wed, 22 Feb 2006 14:11:09 +0000 http://mightybargainhunter.com/2006/02/22/reduce-your-refund-but-not-by-too-much/#comment-723 Ok so I was reading what you had to say about owing the gov't a penalty if you don't have enough taxes taken out of your paycheck during the year. Can you expound on this. My husband and I were thinking about setting up his paychecks at work so that no federal taxes come out of them, and then just put the amount that would have come out of them each week in our HSBC account and let it earn interest. This year we actually got more money back from our tax return than what we paid in (because of our student loan interest and because of the child tax credit) so we will probably get a refund next year even if we have no taxes taken out. So if we set it up so no federal taxes come out of his check will we really have to pay penalities, or is that just for self employed people? Thanks Ok so I was reading what you had to say about owing the gov’t a penalty if you don’t have enough taxes taken out of your paycheck during the year. Can you expound on this. My husband and I were thinking about setting up his paychecks at work so that no federal taxes come out of them, and then just put the amount that would have come out of them each week in our HSBC account and let it earn interest. This year we actually got more money back from our tax return than what we paid in (because of our student loan interest and because of the child tax credit) so we will probably get a refund next year even if we have no taxes taken out. So if we set it up so no federal taxes come out of his check will we really have to pay penalities, or is that just for self employed people? Thanks

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