22 Jun Does Filling Out A W-4 Really Matter?

Onboarding with a new job can be stressful in a lot of ways. Knowing how to fill out your W-4 shouldn’t be one of them.

Federal and state income taxes are pay-as-you-go taxes. This means you pay your tax as you earn or receive income during the year. Your employer takes out – or withholds – income tax from your paychecks and pays it to the IRS in your name.

You will know how well you estimated when you file your tax return. Will you owe? Or get a refund?

Filling out your W-4 form is how you estimate what you are going to owe to the government for that year. If you don’t have enough tax withheld, you may face an unexpected tax bill and a possible penalty when you file your return next year.

Yes… possibly a penalty. 

If you overpay or have too much tax withheld during the year, you will likely get a tax refund next year. Of course, we all like getting a nice refund check, however, adjusting the tax withheld up front (from each pay) may mean more money in your pocket throughout the year.

Form W-4, Employee’s Withholding Certificate

When you start a new job OR if your personal or financial situation changes, you need to designate your withholdings. AKA. Fill out a W-4. And a state form if your state collects income tax.

Follow the steps on the W-4 form.

1. Enter your personal information – The government needs to know who you are and how you want to file – single, married filing jointly, or Head of Household ( unmarried and paying to provide a home for yourself and a qualifying individual).
2. Are there multiple jobs that must be accounted for?  If you have more than 1 job or are filing jointly and your spouse works. You can fill out the worksheet that is part of the W-4 form, use the Tax Withholding Estimator or if there are only 2 jobs with similar pay, just check the box.
3. Do you need to claim dependents? Multiply the number of children under the age of 17 by $2000.
4. If you plan to claim additional deductions or prefer to have extra withholding taken make sure to put that information in section 4.

Once you fill out your form, your employer will add that specific information into your company’s payroll software, and those taxes along with your social security and medicare taxes are deducted from each pay.

For more information from the IRS, please go to
https://www.irs.gov/newsroom/what-people-new-to-the-workforce-need-to-know-about-income-tax-withholding