Why would one choose NOT to withhold income tax?

Reasons:

1. They don't anticipate their income to exceed their deductions resulting in zero taxable income.

2. They owe delinquent student loans or child support and don't want their refund applied to these debts.

3. They are "tax protestors," i.e. they erroneously believe that income taxes are illegal.

4. They want to maximize their take home pay during the year.

Advantages:

1. Overwithholding when someone won't owe any tax is equivalent to giving the government an interest free loan. The government has use of your money and you don't have access to it until it is refunded to you, so if no tax is going to be owed it is more advantageous to have access the money throughout the year, possibly placing the funds into a savings account so that the money will earn interest.

2. The taxpayer pays less toward their debt, resulting in more cash in pocket.

3. Tax protestors: They don't pay income tax...until they get caught.

4. More take home pay throughout the year.

Disadvantages:

1. If the person's income is higher than anticipated, they may owe tax at the end of the year.

2. Student loan and child support debt will take longer to be paid off if refunds are not taken.

3. Tax protestors get caught and the penalties are HUGE.

4. May have to pay tax in full at the end of the year, and may have an estimated tax penalty assessed.

I'm sure there are more reasons but this is all I can think of at the moment.

W-4 form Allowances for for the withholding of the federal income tax amount for each pay period during the tax year.

You really do have to be very careful when you do start playing games with your W-4 form during the tax year.

IRS review of requested Forms W-4. When requested by the IRS, you must make original Forms W-4 available for inspection by an IRS employee. You may also be directed to send certain Forms W-4 to the IRS. You may receive a notice from the IRS requiring you to submit a copy of Form W-4 for one or more of your named employees. Send the requested copy or copies of Form W-4 to the IRS at the address provided and in the manner directed by the notice. The IRS may also require you to submit copies of Form W-4 to the IRS as directed by a revenue procedure or notice published in the Internal Revenue Bulletin. When we refer to Form W-4, the same rules apply to Formulario W-4(SP), its Spanish translation.

After submitting a copy of a requested Form W-4 to the IRS, continue to withhold federal income tax based on that Form W-4 if it is valid (see Invalid Forms W-4 , later in this section). However, if the IRS later notifies you in writing the employee is not entitled to claim exemption from withholding or a claimed number of withholding allowances, withhold federal income tax based on the effective date, marital status, and maximum number of withholding allowances specified in the notice (commonly referred to as a "lock-in letter").

Initial lock-in letter. The IRS also uses information reported on Form W-2 to identify employees with withholding compliance problems. In some cases, if a serious under-withholding problem is found to exist for a particular employee, the IRS may issue a lock-in letter to the employer specifying the maximum number of withholding allowances and marital status permitted for a specific employee. You must furnish this notice to the employee within 10 business days of receipt if the employee is employed by you as of the date of the notice. Begin withholding based on the notice on the date specified in the notice.

http://www.irs.gov/publications/p15/ar02.html

Hope that you find the above enclosed information useful. 01/27/2013

u can chose the number of deductions (people)

as a way to reduce with holding.

u can not stop all with holding.

only recognized religious preachers types can.

and that is only for Social Security not

federal taxes.