Tax witholding question & IRS website

[Eagle]

So I have a tax withholding question... Typically we get a check back for $3000 a year. I realize that is giving the government a 0% interest loan. So my question is I used the following website:

http://www.irs.gov/Individuals/IRS-Withholding-Calculator

And according to my calculations I should get back about the same this year.

So first question should I raise my total number of allowances I'm claiming?

The IRS calculator said I should claim a withholding of 15. The maximum I can claim is 10 without filling out further paperwork.

Second question is what are the legal consequences for raising the number of allowances I'm claiming?

Thanks in advance for your help

[doingitallwrong]

So first question should I raise my total number of allowances I'm claiming?

If you want to have less withheld, then yes. If you originally chose the "Married, but withhold at higher single rate" option on your W-4, you can change that, too.

Second question is what are the legal consequences for raising the number of allowances I'm claiming?

There are none, if you have a reasonable basis for the number of allowances you claim. (I would argue that the IRS withholding calculator is a reasonable basis, but I would also probably print out the results screen. ) You could face criminal charges if you falsify or fraudulently fill out the W-4, or fail to provide information that would increase your withholding amount. There may be a penalty if you claim 15 allowances but reasonably you can only claim five. (The IRS will send you and your employer a letter if you get it very wrong.) There may also be penalties for underpayment of tax, if you don't have enough withheld throughout the year.

[creditcardfree]

I would increase to 10 at least for the remainder of the year. You will still get a refund for 2014 when you file in Spring 2015. At the beginning of January, go to the IRS website and use the calculator again. You will likely get a lower number than 15, as the calculator right now is trying to off set your under withholding from earlier in the year.

You can also use the instructions on the W-4 (front and back) to figure what you should be claiming, and start with that number now and not have to worry about changing in January (assuming numbers will be fairly similar in 2015).