There are patients that we dread to care for. During report, we tactfully offer to take more patients, a more critical patient, or even offer to float to another area to avoid being assigned to the ONE patient no one wants. In the tax world, one conversation tax professionals dread is with a taxpayer that filed exempt and owes a bundle of taxes. You do everything you can to avoid the obvious and you hope the taxpayer is already aware of their situation. If they confess, it’s your chance to exhale. What is “filing exempt?” “Filing Exempt” is a term that describes any change in withholding that claims extra exemptions or declares outright exemption for tax withholding. The form that is used for this is called the W4. Most states follow this Federal form but some have their own that works similarly. Travelers file exempt for various reasons. The most common is to bolster take-home pay during a financial hardship. Those periods in life are understandable but there are other reasons travelers file exempt that do not benefit in the long haul, especially when there is an amount is owed with the annual tax return. 1) Extended period of overtime Travelers often confuse tax withholding with actual tax. The statement that someone is “taxed more” for working overtime is misleading. While more taxes may be withheld during an extended period of overtime, the extra withholding is triggered by formulas that anticipate taxes based on a prospective estimate of total annual […]

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