The IRS will not put you in jail for not being able to pay your taxes if you file your return. dividend distribution, then he or she cant claim exempt on the W-4 form. Tax evasion cases mostly start with taxpayers who: Misreport income, credits, and/or deductions on tax returns. Spin Class Theme Ideas, This is your one-stop encyclopedia that has numerous frequently asked questions answered. Instead of claiming exempt, you could enter extra allowances to limit how much is withheld from your paycheck,In your case, you are OK, since you have enoughpersonal exemptions,standard deduction,& credits, etc to keep your income from being taxable. Even if you qualify for a federal tax exemption, your employer will still withhold Social Security and Medicare taxes. They're always withheld no matter what you claim.) If you meet the criteria for filing as exempt you should file exempt on your W-4. claim exempt Going forward, do not claim to be exempt. TurboTaxKasey says: April 10, 2019 at 4:15 pm. I have been working at my job for a year in a half. The IRS can However, if you wind up owing a significant amount of tax and cannot pay it when due, the probability is increased. When you sit down to do your taxes, if the taxes you owe are less than the total amount withheld, the IRS will send you a tax refund for the difference. If you still claim exempt from withholding and earn income in excess of this amount, you will probably owe some taxes unless you qualify for refundable tax credits like the Earned Income Tax Credit or the Child Tax Credit. However, I didn't notice the mistake till yesterday so my 2020 Tax Returns so I'd like to avoid another large amount of money being due next year. Will I go to jail for claiming exempt? Criminal Vs. Civil Proceedings. Will estate tax exemption change in 2021? There are some exceptions, one of which is if you pay more taxes than the prior year, you generally will not face a penalty.