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Old 12-21-2019, 03:25 PM
 
Location: Silicon Valley
4,075 posts, read 1,858,657 times
Reputation: 6831

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On the side, constantly screwing with your HR's payroll is a great way to lose credibility incredibly quickly. I have recommended people be passed over for a promotion because they are focused on gaming the system (as I saw it) and not on the things that would make the company better and allow for higher pay.

There's a million ways to do your taxes. Don't involve your employer.
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Old 12-21-2019, 03:54 PM
 
4,803 posts, read 1,261,924 times
Reputation: 5688
Quote:
Originally Posted by grouse789 View Post
Family of 5 married claiming 7 state, 9 federal January through November. In December they change the dependents to 5 federal 5 state. Earning $140,000.
His reason is that he won't get "caught" that way.
I earn the same, have same family size and claim 6 state, 7federal. I don't change my allowances in December, and have never had a problem. I get very little back in taxes.
Ok, ready? Go!
You can claim whatever you want on withholding, you're only hurting yourself come tax time when you file with the IRS. Your tax preparer shouldn't let you lie. Self-submit and you're just lying to yourself and many others.

I understand certain things may cause you to legitimately claim more exemptions than you have children. For example:

Enter "1" if you are single and have only one job / married filing jointly and have only one job

Enter "1" if no one else can claim you as a dependent

But family of 5 meaning 3 kids, you're WAY overboard on exemptions. You'd better be putting some back for what you'll owe. Just saying.

Unless he's been able to come out ahead in previous years itemizing and claiming this nonsense, I don't see how this can possibly work.
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Old 12-21-2019, 07:53 PM
 
Location: New York
868 posts, read 713,959 times
Reputation: 1626
Quote:
Originally Posted by ddm2k View Post

But family of 5 meaning 3 kids, you're WAY overboard on exemptions. You'd better be putting some back for what you'll owe. Just saying.

Unless he's been able to come out ahead in previous years itemizing and claiming this nonsense, I don't see how this can possibly work.
it works because he switches the dependents back to five in December. to me that's red flags everywhere. That's why I presented the scenario here.
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Old 12-21-2019, 08:16 PM
 
Location: OH>IL>CO>CT
5,484 posts, read 8,897,887 times
Reputation: 7656
Quote:
Originally Posted by grouse789 View Post
it works because he switches the dependents back to five in December. to me that's red flags everywhere. That's why I presented the scenario here.
That system won't work for him next year. The W-4 is changing to actual dollars, not "exemptions"

See https://www.irs.gov/pub/irs-pdf/fw4.pdf and/or post #8
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Old 12-21-2019, 10:48 PM
 
3,309 posts, read 3,108,045 times
Reputation: 1946
Quote:
Originally Posted by artillery77 View Post
On the side, constantly screwing with your HR's payroll is a great way to lose credibility incredibly quickly. I have recommended people be passed over for a promotion because they are focused on gaming the system (as I saw it) and not on the things that would make the company better and allow for higher pay.

There's a million ways to do your taxes. Don't involve your employer.
I'd agree that burdening your employer's HR team to slightly optimize your payroll cashflow (at risk of paying a penalty later on) is a bad idea, but I'd argue what you did in response is even worse. To the impacted employees and their coworkers it will appear that promotion decisions are arbitrary; that's completely toxic to work output generally and retention of stronger people and will hurt the company a lot more than the extra HR workload the people doing this nonsense are imposing. It's a disproportionate and harmful response.
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Old 12-22-2019, 11:35 AM
 
2,119 posts, read 971,663 times
Reputation: 3799
Quote:
Originally Posted by artillery77 View Post
On the side, constantly screwing with your HR's payroll is a great way to lose credibility incredibly quickly. I have recommended people be passed over for a promotion because they are focused on gaming the system (as I saw it) and not on the things that would make the company better and allow for higher pay.

There's a million ways to do your taxes. Don't involve your employer.
If the employer has an automated system, like mine does, HR doesn't get involved, and there's no impact on anyone in payroll processing.

Changing deductions is not "gaming" the system. I've done it to change cash flow a few times. It's my money, my choice.
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Old 12-22-2019, 11:53 AM
 
Location: Western Washington
9,784 posts, read 8,972,104 times
Reputation: 17088
Quote:
Originally Posted by grouse789 View Post
it works because he switches the dependents back to five in December. to me that's red flags everywhere. That's why I presented the scenario here.
You seem to think that the exemptions claimed in the middle of the tax year have some sort of impact on the amount of tax liability you have. That isn't the case at all.

You could theoretically be single and claim 20 exemptions, lowering your tax withholding to virtually nothing. However, at the end of the year, when you file your taxes and submit your status as single, taking the standard deduction only, you will have the same tax liability as a person who claimed no exemptions throughout the the year.

The difference is you would have had more take home pay throughout the year, and owe every single tax dollar when you file. The other person would have had less take home pay throughout the year, and will owe little, or get a refund, when filing.
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Old 12-22-2019, 01:23 PM
 
12,333 posts, read 20,937,183 times
Reputation: 20569
I knew more people going the opposite direction. They took fewer deductions in order to have a big tax refund. For whatever reasons.
__________________
Solly says — Be nice!
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Old 12-22-2019, 02:13 PM
 
2,470 posts, read 953,472 times
Reputation: 3410
They haven't done any illegal or even remotely unethical.
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Old 12-22-2019, 02:48 PM
 
Location: Las Vegas & San Diego
996 posts, read 172,738 times
Reputation: 902
Quote:
Originally Posted by grouse789 View Post
it works because he switches the dependents back to five in December. to me that's red flags everywhere. That's why I presented the scenario here.
You can claim zero or claim 20 - either is valid and is not considered cheating. The difference comes at tax time, how much pay or get back although there is potentially a penalty for underpaying estimated taxes.
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