Thursday, September 3, 2015

What is a W-4?


Cathy A. Robinson, CPA
Senior Manager
robinson@hwco.com
 


So you are starting a new job.  You will have many forms to fill out the first day including a W-4.  Do you know why you complete a W-4? Not to worry, we are here to help.


What exactly is a W-4?

Simply, it is used by your employer to withhold the proper amount of Federal income tax from your pay.


Why fill out a W-4?

Completing a W-4 accurately can help save you money in two ways. The first way is it helps to prevent you from overpaying your taxes.  Doing this can mean putting more money in your pocket throughout the year. The second way is to ensure you do not owe anything at tax time.

 How do you fill one out?

If you are single, the W-4 is straight forward and easy to complete. For those who are married or have more than one job, the process becomes more complex.  The W-4 includes a series of worksheets to help guide you through this process.  There are also worksheets included for those who have a spouse working as well or for those who have additional employment. 


It is important to keep in mind as well the higher the exemption number claimed, the higher the amount of your net pay. The tradeoff, however,  there will be less withholding deducted from your pay, and you could owe on April 15th.

 

Remember, ask your tax professional should you have any questions in regards to filling out the W-4 or the tax worksheets attached to it.