The w4 Form

Every pay period your net income is reduced when your employer takes federally and state mandated taxes out of your paycheck. Form W-4 allows you a degree of control over how much of your income you want to subject to those federal taxes by controlling the amount of withholding allowances you can claim on your paycheck. Withholding allowances adjust the amount of income that is subject to federal income tax. You can adjust your withholding allowances at any time during your employment.

As a new employee you will be asked to fill out a Form W-4. Employees also can submit a new Form W-4 at any time during their employment in order to change their withholding allowances.

Whenever you experience a life change such as a new address, marriage or the birth of a baby, you need to update your W - 4 without delay; Never wait until the end of the year to make it.

On item 1 of the W-4, print your full name legibly.  Box 2 asks for your social security number.   Box 3 wants your marital status.  Line 4 asks if you are known by some different last name, for example, you may be recently married with a surname change.

Line 5 can be tricky sometimes, but it’s crucial to write the correct number of allowances.

The top of the W-4 form

iT contains a Personal Allowances Worksheet that’s somewhat self-explanatory.  In a nutshell, it gives you guidelines for what number to write on Line 5 of the W-4; this is the number of allowances you are claiming.  If you have no dependents and no spouse, you probably want to write “1” on line 5.  Many people write “0”.  That means you are likely to get a tax refund when you file your year-end income tax.

This may sound like a good idea, but it means that the IRS had access to your money all year, that you could have invested or used for yourself.  But, if you’re not much of a saver, it may be best to write “0”.

Married taxpayers

Married taxpayers filing jointly need to confer with their spouse so they’ll write the correct number on line 5.  Taxpayers with dependents generally write a bigger number than “1” depending on the number of dependents, and the number of exemptions their spouse has claimed on their W-4.


  On line 7, you’re asked to write “Exempt” if you had no tax liability last year, and expect to be in the same situation again this year.  Most people leave this blank.  Few employed people are in a position to be exempt from paying federal taxes.

Complete the W-4 correctly

A federal W-4 form is only complete if you’ve signed and dated it.  Most states have their own W-4 form to complete in addition to the federal form.   When you file your federal income tax each mid-April and the amount you owe or if the refund is relatively small, then you probably wrote the correct number on line 5. If you’re due a large refund and your situation looks similar for the next year, you probably want to write a larger number on line 5.  If you end up owing the IRS a significant amount of money, you definitely want to change line 5 on the W-4, pronto.  You can either lower the number on line 5, or fill in a dollar amount on line 6.

Complete the W-4 correctly, and you’ll avoid unpleasant surprises at tax-time.  The HR staff at work can help you.  It’s a simple task, but it must be done correctly.

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