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Federal Tax Form W-4 Explained

Federal Tax Form W-4 Explained

Form W-4 is one of the federal tax forms every employee must fill out when starting a new job. These federal tax forms indicate how much employers should withhold in state and federal taxes from the employee’s paycheck.

The IRS requires that businesses keep W-4 federal tax forms on file for all employees at all times. If requested, the business must provide these tax forms as proof that they are withholding the correct amount of federal taxes from your paycheck.

What’s on Form W-4?

W-4 federal tax forms simply provide an employer with information on how much money they need to withhold in taxes for each of their employees. Form W-4 calculates this amount based on several criteria. This information is based on your situation from the year you are filing for. In other words, what you put down on your form W-4 should indicate your tax status at the present time.

For example, one thing the W-4 asks for is your marital status. If you’re currently single, but plan on marrying over the next year, you would still put that you’re single. It doesn’t matter that this will change soon. You only include information that is true at the time you fill out your employer-required federal tax forms.

Another question asked is how many dependents, including yourself, you need to claim. If you have two children living in your household, that would be at least two dependents. If your wife is currently pregnant, you wouldn’t include that child on your federal tax forms yet.

The W-4 will also want to know if you’re the head of the household. This typically means that you provide a household for a qualifying dependent and provide for more than half of his or her income.

Do you have child care payments? If they are over $1,500 make sure to claim them on the federal tax forms you’re filling out for your employer. This does not include child support payments, only child care. Mistaking child support and child care is a common error made on W-4 federal tax forms.

Second Jobs and Form W-4

If you find yourself filling out a second set of W-4 tax forms for a different job, there’s something else you must take into account. You may be claiming too many allowances. The IRS recommends only claiming your withholding allowances (the total which is found on Form W-4 Line H) from one employer ‘ the employer from which you make the highest salary or wages. They then recommend claiming zero allowances on the W-4 federal tax forms you fill out for any other employers you may have at the same time. This will ensure the correct amount of taxes is withheld from both paychecks throughout the year.

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