Form W-4

Understand your tax forms

Form W-4p, Form W-4 2012

Form W-4What is Form W-4?

Form W-4 is a tax form used by the IRS. It’s used by employers to calculate the correct amount to withhold from a worker’s wages. The amount withheld should equal the tax that’s due on the annual 1040 form, but in a lot of cases, it is off by quite a bit. When filling out a W-4 form, the employee figures out how many allowances they will claim, dependent on their tax situation. For every allowance that’s taken, the amount withheld as income tax drops. That reduces the tax refund the employee may be eligible for, or raises the employee’s tax liability. There is no interest due for a too-high withholding, and there are penalties assessed for withholding too little.

One thing that’s confusing to some is that the number of allowances does not always equal the number of exemptions claimed on Form 1040. Although the allowances on the two forms are similar, there is an extra W-4 allowance that a person can get if they only have one job. If someone has two jobs, they either forfeit the allowance for both, or they keep the allowance from the job that provides the highest annual income.

The W-4 doesn’t have a provision for the partial year of employment; it has to be asked for in writing from the employer, in addition to Form W-4. The partial year method can be used when the employment period is less than 245 days. There is another method, the cumulative wage method, which is used if a worker’s 1040 exemption status changes during the year when they submit a revised W-4.

If a worker has not had enough withheld, Line 6 on Form W-4 allows them to withhold the correct amount for every pay period. Employees also have the option to send an estimated quarterly tax payment to the IRS, and if they have other income that isn’t subject to withholding, this option may be mandatory. If someone claims exemption from withholding, they will likely face greater scrutiny from the IRS.

Download Form W-4 at: http://www.irs.gov/pub/irs-pdf/fw4.pdf

Related posts:

 

Leave a Reply

Your email address will not be published. Required fields are marked *

*

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

 

 

disclaimer