When you’re starting a new job, your employer will ask you to fill out a W-4 form.
W-4, W-2, 1098, 1098-T, 1099 – Another one?! We know it’s confusing, but we’re here to guide you!
What is form W-4?
This form tells your employer how much federal income taxes should be WITHHELD from your paycheck.
The amount of federal tax dollars that you choose to withhold is in your control! (Scary or Exciting?!)
This decision is driven by the number of allowances you claim on the W-4.
What is an allowance?
You can elect allowances based on a set of specific criteria that the IRS specifies, which include:
- Allowance for yourself
- If you’re filing your taxes jointly
- If you identify as head of household
- If you’re single
- Child tax credits, credit for other dependents, and more seen below!
Take a look at the current form for 2019 below :
Bottom-line: The more allowances you claim on this form, your employer will withhold less in taxes.
Electing too many allowances may cause you to end up owing the IRS money when you’re filing your taxes?
The IRS needs to make sure you’re paying the correct amount in taxes based on your income bracket.