The W-4 Form
Also referred to as an Employee’s Withholding Allowance, the W-4 form is an IRS form which every employee fills in. This is for the purposes of informing their employer the amount of money they ought to withhold from their paychecks for federal income tax purposes. It also ensures that you as the employee do not overpay your taxes. Therefore, you have to fill a W-4 form and if possible change it every year so that it is able to capture new details such as additional kids or spouse.
Filing a W-4 form does not require a lot of knowledge on the subject of tax or the tax system. However, this does not mean that you carelessly complete the form without reviewing it, as this could lead to financial stress in the future. For instance, you can choose to have a lump sum withheld from every paycheck you receive, which in turn reduces your monthly income. Conversely, you can greatly reduce the amount of money being withheld, which would mean more monthly income for you. However, this may seem like the ideal way to handle this issue, but when completing your final returns you will always face the burden of paying hefty tax bills.
How to get started
The W-4 has fewer lines, thus lifting the struggle or confusion evident in most legal matters. While perusing through the form you will note that its information is basic and highly precise. In the form, you will encounter several questions such as calculating allowances. Use calculators to avoid mistakes.
The word “allowances” will appear one too many times in the form. It may seem confusing or complicated, but this should not worry you! The main idea in the W-4 form is “allowances”. You see, the more the allowances you claim, the lesser the amount of money your employer withholds. Therefore, you can have several allowances, but they should fall under the following categories:
• You get an allowance for you, the employee
• You can get an allowance for your spouse
• Lastly, you can get an allowance for every dependant you fill in your tax returns
Other than that, you are allowed other additional allowances in certain situations. Below are these situations:
• If you wish to itemize your deductions
• If you are eligible to claim tax credit for dependent or child care expenses
• If your filing status reads “head of household”
At the end of the filling process, you have, to sum up, the number of allowances and come up with a grand total.
You are now past the Personal Allowances Worksheet part and are therefore required to fill an actual certificate. Here you have to provide information such as:
• Your name
• Your Social Security number
• Your address
• Marital status
• The sum total of allowances you are claiming
• Additional allowances, if any
• Exempt from withholding
• Sign the form
• Fill in the date
• Take the form to the HR
In the case of changes in the family, such as a newborn, feel free to fill a new W-4 form. Hopefully, you can now fill out the W-4 form accurately without any difficulty.