Form W-4: What It Is And How To File?

Form W-4

This determines how much tax will be withheld from your pay. When one starts a new job, one will complete Form W-4, Employee’s Withholding Certificate. This form determines how much tax your employer will withhold from your paycheck. The amount withheld is paid to the Internal Revenue Service(IRS) using your name and Social Security Number. When you file your annual tax return, you will be credited with the tax amount paid from your paycheck throughout the year.

One needs to complete a W-4 correctly because the IRS requires workers to pay taxes on their income throughout the year. If they fail to withhold enough tax, you could owe a large sum plus interest and penalties for underpaying your taxes to the IRS when you file your tax return. If you withhold too much tax during the year, your monthly income will be reduced and you won’t get your excess tax back until you file your tax return and receive a refund.

How To Fill Out Form W-4 

If you are single have a spouse who doesn’t work, do not have dependents who have income from one job, and do not claim tax credits or itemize deductions on your tax return, filling out a Form W-4 is easy. Just provide your name and address social security number and filing status, and your withholding will be computed based on your standard deduction and tax rates.

You can increase your withholding using Form W-4 if you hold more than one job both you and your spouse work, or have income from other sources that are not subjected to withholding. You can also decrease your withholding if you are eligible for income tax credits such as the child tax credit or credit for other dependents or the basic standard deduction