Question

Tax Liability

Forum|Forum|2 years ago
April 30, 2024
1 reply
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If I have sufficient solar credit rollover to cover my current year federal tax liability, can I stop having federal tax withholding for this year? My estimated 2024 tax liability is ~$7800 and I have a solar credit rollover of $10,452. So I would like to stop having FITW this year since my rollover covers my liability and all I will get as a refund is the money I had withheld. 2024 money is worth more now vice in 2025.

Not A Product Question

O

Opus 17

Employee

Yes, you can do that. Don't claim exempt on your W-4, but add an adjustment to line 4b. To correct for the fact that line 4b is based on deductions, rather than credits, divide the credit by your tax rate. For example, if you are in the 22% bracket and you are expecting a $7000 credit, that would be equivalent to $7000÷22%=$31,800 of extra deductions. It would be better for you to underestimate the deduction so you still get a refund (but smaller) than to overestimate the deduction and have to pay tax, because that could lead to owing a penalty. And don't forget to readjust your withholding in January 2025.