More tips on W4 Use
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Your W-4 lets you have a say in how much is taken out of your regular paycheck.
The federal and state governments get a piece of your pay either when you get a check or later when you have to pay tax after the end of the year.
The w4 form does give you some control over when they can take the money from you.
It is when you state on the W-4 form the amount of withholding allowance you will claim. This controls the amount of your pay that will be taxed as you get each paycheck.
The nice part is that you can change your withholding allowances even if you have already filled out a W-4 form. It can be changed during the year.
The dollars and cents that are to be paid to Uncle Sam are all added up at the end of the year when you are filing taxes.
You might have to pay a large amount for tax or maybe get nothing for the return and break even. It all depends on how much you paid in advance and what your bill would be for the year.
Remember you can change your W-4 during the year to change how much they take out ahead of time for tax.
To do this, you can download a W-4 right here and save it in your computer. Then save the same W-4 under a different name. This way you have two in your computer. This gives you a nice clean one for the future and one to fill in right away.
Page one has some instructions and a personal allowance worksheet. Page two has a deductions and adjustments worksheet and a two earners - multiple jobs worksheet.
The Withholding Allowances
This is for the tax year that you are in. The Personal Allowances Worksheet section A through H, asks questions that you have to be correct in answering.
If you want to file jointly with your spouse then you should calculate your withholding allowances that way when you fill the W-4. You can divide your total allowances in any way, but you can't both claim the same allowance.
You would use one set of worksheets for the both of you. Combine your exemptions, deductions, adjustments and income.
For those who are taking personal exemptions and standard deduction and no other deductions they may go to number seven.
There is a bit more to concern your self with but in the end use Publication 505 from the IRS to check your details and the law.
Using a bit of math you can figure out what your yearly withholding amount will be and decide whether you want to have more or less taken out of a paycheck. Leave yourself in a financially comfortable position at the end of the year.
If you lose a job and have to pay a bunch of tax because you saved yourself from paying from your paycheck, it would not be a good thing.
If you have submitted a W-4 to your boss and want to change it you can submit another one but your company doesn't have to apply it until the beginning of the pay period after 30 days have passed. Most companies will start right away or at least sooner.
The "Lock In Letter" from the IRS
If you think it is funny to claim a bunch of dependents lets say fifty of them and fill in your W-4 form this way, you might very well get a letter from the IRS stating that your employer has the obligation to take out more tax from you if you can't prove the validity of the fifty dependents claim.
Your employer will also receive a copy to give to you so there is no wiggling out of this.
If your employer doesn't play nice with the IRS, they will have your employer pay the amount of taxes that are owed to them by you legally for starters.
It all starts when you get a letter from the IRS that tells you that your boss will have to start withholing more money from your check. You can call the provided IRS's toll free number or write to them to discuss the issue.
Once the "Lock in Letter" starts to take effect you can't change it by re submitting a W-4 or in any other way other than quitting your job. If you are rehired within a year the letter is still in effect.
A few questions answered...
How many allowances can I claim? Here are some answers.
- If you are single with one job and living on your own you have one allowance.
- If you are single and have two young children - three allowances.
- You are married and only your spouse is working - two allowances.
- Your spouse earns a lot more than you do.
The higher paid spouse should claim as married, and claim all of the allowances for the family.
Lower earning spouse should claim married and withhold at a single higher rate with 0 allowances.
- You are an unmarried and childless high school or college student and living with your parents.
You can claim single with 0 allowances, as your parents should have claimed you as an allowance.