Max allowances on w4, and not pay income tax till end of year?
Is there a reason that I can't do the max number of allowances on my w4, and pay no income tax during the year? I would then put the amount that you are normally supposed to withhold every pay check into a savings account or CD.
The reasons being: I would get a little interest on the money throughout the year, improve my cash flow throughout the year if I ever needed a little more for some reason, and not let the government hold on to my money throughout the year.
Please don't tell me I shouldn't do this because I might not have enough at the end of the year. I have plenty of self-control to execute this if it is possible.
Just want to know if I can do this and not get any sort of penalty? Furthermore, could I file an extension every year and push this off till October without paying any penalties?
Was thinking I could do this with my property taxes and HOA dues as well, and have tens of thousands gaining interest throughout the year.
(2)2 Comments
Sorted by latest first Latest Oldest Best
There is the underpayment penalty, and of course the general risk of any balloon-style loan. While you think that you have enough self-discipline, you never know what may happen that may prevent you from having enough cash at hands to pay the accumulated tax at the end of the year. If you try to do more risky investments (trying to maximize the opportunity) you may lose some of the money, or have some other kind of emergency that may preempt the tax payment.
Regarding doing this with your HOA: the cost could be very high.
In my community the annual dues is less than 0 a year. When people don't pay they are aggressive. There is a late fee after 30 days, then a higher penalty at 60 days. That 2nd notice comes from a lawyer. The community charges the homeowner the lawer's fee. After another 30 days they file a lien. With those costs a small bill has ballooned to over ,000.
Property tax has two other issues. The government can sell your house. The lender can foreclose. Neither is good.
Terms of Use Privacy policy Contact About Cancellation policy © freshhoot.com2025 All Rights reserved.