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Allowance Certificate. Because of the financial difficulties
that petitioner and Mazzilli were having at that time, Mazzilli
advised petitioner to claim 10 withholding allowances on the
Form W-4, and petitioner agreed to do so. Petitioner was aware
that this practice would increase her take-home pay but would
result in a lesser amount of Federal income tax being withheld
from her wages than that which would become due on her portion of
Mazzilli’s and her joint income.
Mazzilli began working for Pfister Chemical, Inc. (Pfister),
during 1992. Mazzilli also claimed 10 withholding allowances on
the Form W-4 that he completed when he began his employment at
Pfister.
During 1993, 1994, and 1995, petitioner worked as a
receptionist for Lawrence Katz, M.D., and Mazzilli maintained his
employment at Pfister. Petitioner and Mazzilli each claimed
between 5 and 10 withholding allowances during those years. For
1992 through 1995, petitioner had the following amounts of wage
income and Federal income tax withheld from that income:
Year Wage Income Federal Income Tax Withheld
1992 $3,314 $156
1993 16,565 1,144
1994 16,705 66
1995 17,440 0
Even though petitioner and Mazzilli both were employed by
the end of 1992, they remained behind in their monthly mortgage
payments. After several foreclosure proceedings had been
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