A Complete Guide About Employees Withholding Tax

You can complete the W-4 Form so your employer can withhold the correct income tax from your pay. You have to give your employer this W-4 Form, and the IRS will review your W-4 Form. If you don’t withhold your tax, you will owe taxes when filing your income tax returns. In case of delay, you will have to pay the penalty. If you withhold more taxes than the applicable amount, you will generally receive a tax refund.

Withholding Tax Exemptions

There are two basic conditions in which you can claim exemption from withholding tax.

  1. You have no income tax liability for the last year
  2. It is not expected to have income tax liability in the current year

You have no income tax liability for the last year if your total tax amount for last year is zero. It will happen when your earned income is less than the minimum income threshold.

Important Instructions

First, check your filing status, standard deduction, and tax rates to calculate withholding tax. You must repeat this step for the jobs if you do more than one job. If you are married and you and your spouse are working, you will file a withholding. You will not add any income from self-employment sources.

While filling out the form, you must carefully check all necessary boxes. Fill the correction in your form and complete your form in all aspects. Complete your W-4 Form each year and when your financial situation changes.

Changes in Updated W-4 Form

The latest W-4 Form has eliminated the options where you could claim personal allowances. Previously you were able to claim all personal allowances. The more allowances you claim, the less withholding amount your employer will withhold from your pay. The fewer allowances you claim, the more withholding amount your employer will withhold from your pay.

The newer form will ask you the number of dependents in the household section of the W-4 Form.

Step by Step Guide to Fill Out W-4 Form

The new W-4 Form has five steps to fill out. The step one and five are compulsory for all workers.

Step 1: The first section of the Employee Withholding Certificate will require your personal information, including your name, social security number, and address. It indicates that you are filing your taxes as a single person, a married person, or head of the house.

Step 2: This section is for those who have other incomes. It can include the income of the spouse, a second job, freelance income, and income from any other source.

Step 3: This section explains the number of children or dependents.

Step 4: This is an optional section of the W-4 Form. This will require reasons for withholding more or less from your pay. This includes deductions and extra withholding. If you mention your deductions item-wise, this will decrease the amount of taxes you owe.

Step 5: This section includes your signatures with the date.

Final Words

Only you are responsible for your tax returns and withholding tax forms. You must submit a W-4 form complete in all aspects to your employer so he can withhold tax in a correct manner.


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