<prompt> Human: So I am an exempt salaried associate making about 50k a year, paid on 1st and 15th, in Wisconsin. Once a year we get profit sharing if the company budget is met. Profit share is around 1,400. Its always taxied as supplemental income so they take a huge cut. My wife and I recently had our second child and we have some hefty medical bills to go along with the baby. I was told I could exempt myself from paying tax on this check, which will also exempt the bonus from being taxxed. Obviously at the end of the year I will need to square up with my w2 but I always get about 3k back so this wouldnt put me in the negative, it would just mean a smaller return. Is this legal or do I have to pay tax on it immediately? Assistant: Dont claim exempt from withholding on your Form W-4 if you dont meet the requirements: I claim exemption from withholding for 2016, and I certify that I meet both of the following conditions for exemption. Last year I had a right to a refund of all federal income tax withheld because I had no tax liability, and This year I expect a refund of all federal income tax withheld because I expect to have no tax liability.You may be subject to a penalty for underwithholding.Human: This is the part I done understand. Basically federal had to return ALL of the money they took, aka I paid absolutely no federal tax? Or I just got a refund aka I didnt owe additional at end of year? If its the first I feel thats kinda bs, dont we have the right to choose how we want to pay out taxes or are we forced to guess and allow the government to hold those addition funds and benefit from them even though we are overpaying when we get our refund?  <response>: You asked this: Is this legal ?and the Form W-4 says this: Under penalties of perjury, I declare that I have examined this certificate and, to the best of my knowledge and belief, it is true, correct, and complete.If your 2015 federal tax return has anything other than zero on Line 63, you dont meet the first test to claim exempt from federal withholding.Try the Withholding Calculator at IRS.gov. 