How to Stop Employers From Withholding Income Taxes

Employers withhold money from your paycheck to cover the income taxes you owe to the IRS. You can change your withholding amount if you stop earning at the same level, marry, have children, buy a home or make other decisions that affect your finances.

Instructions

Difficulty: Easy

Things You’ll Need:

• W-4 Form

1. Check your current withholding on your next paycheck. Your paycheck stub or statement should list the tax withheld.
2. Use the worksheets in Publication 919 to determine your income-tax liability for this year and your expected withholding. These worksheets will help you to determine how much you can reduce your withholding.
3. Fill out a new W-4 form for your employer. To reduce your withholding, you must increase your allowances. Publication 919 lists tax credits that may also reduce withholding.
4. Stop employers from withholding taxes entirely by claiming no allowances and filing as exempt. Do this by marking line 7. However, to qualify for exemption, you cannot make more than $850 annually.
5. Readjust your withholding as necessary. You can change your withholding status at any time by filing a new W-4 with your employer. You can also change your exemption status at any time.

Tips & Warnings

• W-4 forms are available from your employer or online at the IRS website.
• The IRS offers Publication 919 to help taxpayers adjust their withholdings. It's available on the IRS website.
• If you received a large income tax refund last year, you should consider reducing your withholding.
• When you file a new W-4 form with your employer, it goes into effect no more than 30 days later.
• If you reduce your withholding by too much or stop it altogether, you must pay quarterly estimated taxes the IRS.