The Form W4 tells an employer all about the employee’s filing status. They get to know about the multiple jobs of the employee, credit amounts, amount of deductions, amount of other income, and any additional amount to withhold from the employee’s pay. This information is used to calculate the amount of income tax to deduct and withhold from the employee’s pay. It explains the status of dependents and their children.
When you start a new job, your employer will ask you to fill out a Form W4. It is necessary to fill out the form correctly. Ensure that you have filled the form complete in all aspects.
Situations for Exemptions
You can claim exemptions in two conditions if you have no income tax liability in the previous year and are not expected to have income tax liability in the current year.
Time to File a New W4 Form
Your employer will not send form W4 to the IRS. You use this form to determine your withholding tax. You submit this form, and the employer or company will file it on your behalf. If your financial situation changes, you can submit a new Form W4 to your employer. If you are getting married or divorced, having a child, or having a second job, you must submit a new form to your employer.
Special Considerations
If you got a new job and were previously unemployed, you can save your money by writing a request to your employer to use half year method to calculate withholding. If you do not ask for it, basic calculation formula will be used, which is the calculation with a full-year employment assumption. With a full-year employment calculation, you will have a huge withheld amount. Due to this, you will have to wait for the next tax year to get your tax refunds.
Comparison Between Old and New W4 Form
The new W4 form doesn’t have the option to submit and claim personal allowances. The option to claim personal allowances was in an old version of the W4 form. The more allowances you claim, the less withholding amount your employer will withhold from your pay. The fewer allowances you claim, the more withholding amount your employer will withhold from your pay.
What Information Should You Mention in Form W4?
Section one of the Employee’s Withholding Certificate will require personal details about you. It will require your name, social security number, and permanent address. Section two is for those who have other incomes. It can include the income of the spouse, a second job, freelance income, and income from any other source. Section three explains the number of children or dependents. Section four is an optional section of the W-4 Form. This will require reasons for withholding more or less from your pay. This includes deductions and extra withholding. If you mention your deductions item-wise, this will decrease the amount of taxes you owe. Section five includes your signatures with the date.
Concluding Remarks
You must submit and renew your W-4 forms to your employer so your employer may submit your withholding tax after careful calculation.
