IRS Form W-4, Employee’s Withholding Allowance Certificate
The W-4 is an Internal Revenue Service (IRS) form you complete to let your employer know how much money to withhold from your paycheck for federal taxes. Accurately completing your W-4 can ensure you don’t have a big balance due at tax time. It can also prevent you from overpaying your taxes, putting more money in your pocket during the year. Complete Form W-4 so that your employer can withhold the correct federal income tax from your pay. Consider completing a new Form W-4 each year and when your personal or financial situation changes.
You can also use the W-4 to declare yourself exempt from withholding, meaning your employer will not reduce your salary for any federal income tax. You can claim an exemption from withholding only if you had no income tax liability in the prior year and you don’t expect to owe any tax in the current year.
For example, if you are a single taxpayer who earns approximately $8,000 every year, then you will not owe federal income tax because of the personal exemption and standard deduction you can claim on your tax return, which effectively eliminates the possibility of owing tax on your $8,000 of earnings.
The IRS recommends that if you work more than one job, or if you and your spouse both work, that you claim all your allowances on the W-4 for the highest-paying job and claim zero allowances on the W-4 forms for all other jobs. It also suggests that taxpayers consider completing a new W-4 every time a major life event occurs, such as a marriage, the birth or adoption of a child or a spouse getting or losing a job. These things can have a direct effect on the amount of tax you owe, so your W-4 should account for them.
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