Form W-4

src: r3.cpapracticeadvisor.com

Form W-4 (otherwise known as "Employee Withholding Certificate") is an Internal Revenue Service (IRS) tax form charged by an employee in the United States to indicate the tax situation (exceptions, status, etc.) ) to the employer. Form W-4 notifies the employer of the correct tax amount to deduct from the employee's salary.

Video Form W-4

Motivation

The W-4 is based on the idea of ​​"perks"; the more benefits claimed, the less money the employer holds for tax purposes. An employee can claim benefits for himself, his spouse, and each dependent, along with other reasons, such as being single with just one job. In the latter case, this creates an oddity in that the employee will have one more exception on W-4 than on 1040 tax returns. This is not the tax deduction itself, but the procedure for preventing less deductions for those who do not qualify. Form W-4 is usually not sent to the IRS; Instead, employers use the form to calculate how much employee salary is deducted for tax purposes.

Each year, the IRS issues tax returns to tens of millions of Americans. In 2011 alone, the IRS issued a refund to over 100 million Americans. That means three of the four returns filed for 2011 are asking for money back. All told, the government sent about $ 318 billion to taxpayers, with an average return of about $ 2,900. Claiming allowances on W-4 and updating it often effectively enables the return of previous taxpayer claims payments, by not paying more in the first place. Excessive deductions can occur if, for example, the employee receives a one-time bonus, as it may only take into account the current salary, not the year-to-date amount. (ie deductions calculated as if the employee earns this amount each payday.)

Maps Form W-4

Archiving

Form W-4 includes a series of worksheets to calculate the amount of benefits to be claimed. Someone should provide some personal information and report the total allowances and additional amount of deductions on the actual form. Employees should tear this certificate and leave it to their employer.

One can request an exemption from an employer withholding if a person has no income tax in the prior year and does not expect to owe tax in the current year.

If a person works more than one job or has a working partner, the IRS recommends claiming all benefits on Form W-4 for the highest paid work and claiming zero allowance for other work. The IRS also recommends submitting a new Form W-4 every time a major life event occurs.

Form W-4 itself does not show that anticipation of losses can also be taken into account. If a person expects a deductible loss from a business or lease or investment activity, for example, the deductions may be adjusted to account for any deductions incurred in the tax bill.

The withholding of taxes depends on the personal situation of the employee and should ideally be the same as the annual taxes listed on Form 1040. When filling out Form W-4, an employee calculates the amount of the W-4 Form Allowance to be claimed as expected. the tax filing situation for this year. No interest is paid on excessive deductions, but the penalty may be imposed for not cutting. Alternatively, or in addition, employees may send quarterly tax payments directly to the IRS (Form 1040-ES). Quarterly estimates may be required if the employee has additional income (eg investment or income of the entrepreneur) that is not subject to inadequate cuts or cuts. There is a special version of Form W-4 for other payment types; for example, W-4P for retirement, and W-4V volunteering for certain government payments such as unemployment compensation.

src: i.ytimg.com

External links

• IRS Form W-4 2017

src: i.ytimg.com

See also

• Form W-2
• Form W-9
• Form 1040
• Withholding tax in the United States
• Personal exclusion (United States)

src: i.ytimg.com

References

Source of the article : Wikipedia