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ewing8888 · Dec 15, 2008, 11:23 AM

I am looking to change my withholding status for my final monthly paycheck of the year in a few weeks. I expect the amount to be 15K. I’m looking to make an investment in early January and would like to find a way to pay no or minimal taxes on the last monthly check. I figure the amount in taxes should be relatively equivalent to the expected refund. I was wondering if anyone could advise on the best method to do this.

ebaines · Dec 15, 2008, 11:38 AM

There's really no good way to do this. If they are withholding so much in tax that you normally expect a refund of this magnitude, you should submit an updated W-4 to your payroll department. Do it before the next paycheck and you should see a reduction in the amount of withholding. However, you can not claim exemption from taxes, so you can't mak it so that no taxes are withheld, even for just one paycheck.

ewing8888 · Dec 15, 2008, 12:32 PM

Thanks for the advice. Do you think it may be better to temporaily change my status from W2 to 1099 for the last paycheck of the year?

ebaines · Dec 15, 2008, 12:52 PM

I suppose if your company would let you simply change your status for one paycheck that'll work. However, it raises other issues that may make this less than desirable - such as having to file a schedule C with your tax return, and paying social security as self-employed worker. What other benefits might you lose - medical insurance, life insurance, a 401(k) plan? Personally I think the hassle in order to get your money a month or two earlier than if you simply filed for your refund as early as posible in January is probably not worth the aggravation.