Federal income tax w/held from lump-sum payment

[Burke]

Is there a penalty for putting too many exemptions on the W-4 if anything ever would be checked?.

There is a penalty for underpayment of tax when filing the return, if it qualifies. As long as he pays it.......

[S T]

I understand there could be a $ 500 penalty for overstating Exemption Withholdings on form W-4 - which would be separate from the Form 2210 underpayment penalty on the Tax Return

Penalties
You may have to pay a penalty of $500 if both of the following apply.
You make statements or claim withholding allowances on your Form W-4 that reduce the amount of tax withheld.

You have no reasonable basis for those statements or allowances at the time you prepare your Form W-4.

There is also a criminal penalty for willfully supplying false or fraudulent information on your Form W-4 or for willfully failing to supply information that would increase the amount withheld. The penalty upon conviction can be either a fine of up to $1,000 or imprisonment for up to 1 year, or both.

These penalties will apply if you deliberately and knowingly falsify your Form W-4 in an attempt to reduce or eliminate the proper withholding of taxes. A simple error or an honest mistake will not result in one of these penalties. For example, a person who has tried to figure the number of withholding allowances correctly, but claims seven when the proper number is six, will not be charged a Form W-4 penalty. However, see chapter 4 for information on the penalty for underpaying your tax.

Not really sure if it is enforced or not.

Sandy