Can I elect ZERO withholding on my W4?

[pawel]

Hi,

I am a full-time employee and get a large bonus at the end of the year. I want to change my withholding  elections on my W4 to ZERO because I want to push out paying any taxes on it till the time I am filing my taxes (April).

I am not trying to avoid paying taxes, I am just pushing the payments out to a little later date. My tax advisor suggests I can fill out a new W4 with ZERO withholdings. And when I get the W2, my income that wasn't taxed will show up, and I will have to pay taxes then in April. Is this possible?

Thankz.

[atari]

You should consider replacing your tax advisor.

You can only have zero federal withholdings by filing a W-4 claiming yourself exempt. The requirements for checking the EXEMPT checkbox is that you had no tax liability last year and you expect none this year.

See the instructions for the W-4. You can download it from http://www.irs.gov.

[steven]

Electing zero withholding means that you clain Exempt status.

You cannot claim Exempt under your circumstances as that is fraud. You can claim more allowances but if you don't hit the 90% test you will owe a penalty as well as the tax shortfall.

[sunset]

Hi,

Bonuses and other irregular payments are withheld at a statutory rate of 25% regardless of what is reflected on your Form W-4. Even if your W-4 shows zero witholding which in other words means exempt, 25% will be withheld from your bonus by law.

There is an alternate calculation method that employers can use but it is quite complicated and most employers do not bother with it. It is much easier for them to simply withhold the 25% for FITW, plus the appropriate FICA, Medicare, and State income taxes.

Cheers

[danisara]

Thankfully, bonus checks are usually withheld at the irregular tax rate 25% (for federal taxes). Companies deduct a flat 25% for federal income tax no matter what you have on your W-4. This is exactly to prevent employees from playing games with this one check at the end of the year. 

(Even if you were able to have zero witholding, they would still take out SS and medicare, I guess you probably forgot about that.)