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From: goudreau@dg_rtp.UUCP (Bob Goudreau)
Newsgroups: net.taxes
Subject: Re: income averaging
Message-ID: <172@dg_rtp.UUCP>
Date: Fri, 21-Feb-86 19:16:59 EST
Article-I.D.: dg_rtp.172
Posted: Fri Feb 21 19:16:59 1986
Date-Received: Mon, 24-Feb-86 20:57:03 EST
References: <1911@jhunix.UUCP>
Reply-To: goudreau@dg_rtp.UUCP (Bob Goudreau)
Organization: Data General, RTP North Carolina
Lines: 22

In article <1911@jhunix.UUCP> ins_alal@jhunix.UUCP (Laurah Limbrick) writes:
>
>2) I filled out an exemption form for withholding last February, not realizing 
>that I would be earning over the $3300 limit stipulated in the exemption form.
>Question:  Will I only be taxed on my earnings over the $3300 limit, or will I
>have to pay tax on all my earnings?  I also understand that the IRS can impose 
>some kind of penalty and/or fine on me for filing the exemption form when I 
>exceeded the $3300 limit.  Would they understand (:-) :-) :-) )  if I tried 
>to explain the situation?  What does one normally do when this happens?  Is 
>there something I should have done when I realized that I had earned over 
>$3300?

You will have to pay taxes on all your earnings, like everyone else - minus
any allowable deductions and exemptions, of course.  However, federal taxes
don't even BEGIN until the Adjusted Gross Income hits $3300 (I think that's
still the number), unless you have excessive Interest Income.  There is a 
penalty for having too little of your tax withheld, but you can avoid paying
this if the tax you owed last year was <= the tax you had withheld this year.
You must fill out IRS Form 2210 to avoid the penalty.  You should also file
a new W-4 form this year to change your withholding status.

Bob Goudreau, who went through this mess too.