Tax forms can be difficult to fill out even when they come with their own set of instructions. Form W-4 is no exception. All employees must complete the two-page form so that employers know how much federal income tax to withhold from your paycheck. What is withholding? It involves a portion of your earnings taken from your paycheck and sent to the government. You are required to submit Form W-4 when you are first hired by a company. You can also turn in a new form to your employer once a year if you need to update your filing status.
What happens if you forget to turn in Form W-4 to your employer? The IRS will treat your income as if it were taking taxes from a single person with zero withholding allowances. This is the highest withholding rate possible but could be a problem if you need more take home pay to cover expenses. Here is a link to Form W-4 from the IRS website so you can look it over https:/www/www.irs.gov/pub/irs-pdf/fw4.pdf
Filling Out Form W-4
- Read each statement listed on lines A through G and enter a specified number as your answer; you can leave statements blank if they do not apply to you or you are only claiming yourself
- Add up A through G to calculate total number of allowances and enter in Line H
- Enter the number from Line H of worksheet in Line 5 of Form W-4
- Fill out actions 1 through 4 on Form W-4 these include name, Social Security Number and filing status
- Complete Deductions and Adjustments Worksheet only if you plan to itemize tax deductions or claim credits on your return
- Enter total amount calculated in Line 10 on Line 5 of Form W-4
- Decide if you want additional amount withheld from paycheck and enter in Line 6
- Write “EXEMPT” on Line 7 ONLY if meet the conditions for exemption
- Sign and date Form W-4
Keep in mind the following when filling out or updating your W-4:
- Employers will withhold less money towards your taxes if you claim more allowances on your paycheck.
- A lump sum amount will have to be paid back to the IRS if too little is withheld.
- If you voluntarily raise the amount withheld you can avoid payments at the end of the year.
- Consider updating form if marital status changes, give birth or adopt, change or lose job and if you get a raise.
- You can claim an exemption from withholding if you had no tax liability in previous year. You expect a refund of all income tax withheld because you expect to have no tax liability.