Very soon, the tax season will be upon us and we'll have to deal with all sorts of paperwork. If you are gainfully employed in any capacity you will need to fill out your government forms W 4. This form will be used by your employer to calculate the amount of taxes they should withhold from your salary with each paycheck. The form is divided into several sections.
Introduction
The introduction of the form explains exactly what you and your employer need to know about its purpose. It must be filled out accurately to keep you from over- or underpaying your taxes throughout the year. If your withholdings are too low, you'll find yourself facing a huge tax bill at the end of the year but if your taxes are too high, you'll find that you've overpaid the government instead.
Claiming Your Allowances
The amount of taxes deducted from your pay is based primarily on the amount of "allowances" you claim on your W-4. The more allowances you claim the less money will be deducted from your paycheck. Everyone will be able to claim at least one allowance. Those who are married will claim another for their spouse and will be allowed to claim one for each individual dependent you are supporting. There are other allowances that may be claimed under certain circumstances but make sure you read the instructions carefully to be sure that you are eligible for them.
Requesting Additional Withholdings
You can use government forms W 4 to request additional withholdings if you like. This is used when you want to avoid paying a huge tax bill at the end of the year. Many use this if they are have more than one job, if they are self-employed, or if other members of the household are working too. To request additional withholdings you need to fill out the personal allowance worksheet that comes with the W-4. It is a very beneficial tool as it can help you to avoid paying a major tax bill at the end of the year.
Exemption
Some people are exempted from paying taxes for several reasons. You can indicate that when you fill out the government forms W 4. Those who are exempted had no income tax liability from the previous year and do not expect to have any in the current year. So, if you're single and earn less than $8,000 a year, then you will not owe any federal income taxes because the exemption allowance and standard deductions you can claim will eliminate the amount of taxes that would be owed.
Paying income taxes is a part of life for everyone in the country. Therefore filing a W-4 is more than likely going to be a part of your life for many years. Learning how to fill one out properly can be one of the smartest ways to simplify your taxes. Paying too little taxes may give you a larger paycheck each pay period but inevitably will leave you with a big bill at the end of the year. So, make sure that you dot all your I's and cross all your T's to make sure that everything is done exactly the way Uncle Sam wants it.