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Show Revenue Service Notes Withholding Rules Exemptions waived to increase tax withholding during the year does not mean the loss of exemption exemp-tion benefits for tax filing purposes, pur-poses, Internal Revenue Service said this week. Research into the reasons why some taxpayers are reluctant to "drop" exemptions for withholding withhold-ing purposes recvealed a fear the exemption privilege would be denied them at tax filing time. IRS says the waiving of exemptions exemp-tions for tax withholding purposes pur-poses is strictly a bookkeeping matter. The taxpayer can and should claim all the exemptions to which he is entitled when he makes out his tax return. Insufficient tax withholding can result from a variety of reasons. rea-sons. A taxpayer experiencing this situation can arrange to have his entire tax liability covered by dropping one or more of the exemptions now claimed on the withholding statement filed with his employer. This means a larger sum withheld with-held from each pay check during the year, IRS explained about $120 for each exemption waived. In a few cases in which even dropped exemptions for withholding with-holding purposes will not cover all the tax due at the end of the year, the taxpayer may enter a written agreement with his employer em-ployer to have additional amount withheld, IRS said. |