How Do You Read Your W-2 Tax Statement to Figure How Much Youll Get Back
Employee's Withholding Allowance Certificate
The Federal income tax is a "pay-as-you-go" tax. This means that you are expected to make tax payments throughout the year, instead of all at once at the end of the year. For most people, this requirement is satisfied by having tax withheld from each paycheck.
Begin Your Free E-file
It's the easiest and most accurate way to file your tax returns for both federal and state.
How does your employer know how much tax to withhold? You tell them by filling out IRS Tax Form W-4 (Employee's Withholding Allowance Certificate). On Form W-4, you indicate how many "allowances" you are claiming. Your employer then uses tables provided by the IRS to determine how much tax to withhold from your wages.
When Do I Fill Out Form W-4?
You will fill out a new Form W-4 whenever you start a new job. This lets your employer know how much Federal tax to withhold.
You should also fill out a new Form W-4 if you've had a life-changing event that effects your tax situation. For example, if you get married (or divorced) or have a baby, you will want to adjust your withholding allowances accordingly. This will prevent you from having too little or too much Federal tax withheld.
It's recommended that you periodically review your tax situation each year to evaluate whether you are claiming the proper number of allowances.
How Many Withholding Allowances Can I Claim?
Form W-4 includes several worksheets to help you calculate the number of allowances you can claim:
The "Personal Allowances Worksheet" (Page 1) is used to determine the allowances you can claim based on your filing status and number of dependents. Note that you may be able to claim additional allowances for the Child Tax Credit, as well as the credit for child or dependent care expenses.
The "Deductions and Adjustments Worksheet (Page 2) can be used if you plan to itemize your deductions or claim certain credits/adjustments to your income. This worksheet will help you determine the number of additional allowances you can claim based on your estimated itemized deductions. (Taxpayers who claim the standard deduction can usually skip this worksheet.)
The "Two-Earners/Multiple Jobs Worksheet" (Page 2) is designed for people who have more than one job or a spouse who also works. If you have multiple jobs or are part of a dual-income household, this worksheet can help you figure the correct number of allowances to claim.
File Your Taxes Online
Complete your filing in less than 15 minutes and get your refund as fast as possible.
The more accurately you complete the worksheet(s), the more precise your income tax withholding will be. If you claim too many allowances, you may end up having too little tax withheld, which means you will owe money to the IRS on April 15.
Keep in mind, you do not have to claim the number of allowances the worksheets tell you. This is just the maximum number that you can claim. If you have other sources of income or you want a larger tax refund, you can reduce your allowances. This means that more money will be withheld from your paychecks.
If you earn substantial income from sources that is not subject to withholding, you may be required to pay Estimated Tax during the year to avoid penalties.
What If I'm Exempt from Tax Withholding?
If you are exempt from income tax withholding because you had zero tax liability last year and you do not expect to have any tax liability this year, write "EXEMPT" on Line 7 of Form W-4. This tells your employer that no tax should be withheld from your wages.
For more information, please see IRS Publication 505 (Tax Withholding and Estimated Tax).
You May Also Like
How Do You Read Your W-2 Tax Statement to Figure How Much Youll Get Back
Source: https://www.irs.com/articles/irs-tax-form-w-4-0
0 Response to "How Do You Read Your W-2 Tax Statement to Figure How Much Youll Get Back"
Post a Comment