Tax Day 2024 and How to Get an Extension from the IRS
Tax Day is on Monday, Apr 15, 2024. Not ready to file? Submit an electronic request to the IRS for an extension ASAP!
AskCPASam explains what is the W-4 for?
Q. I just changed my W-4 because my accountant said I had too much tax taken out of my check. It did not change all the federal taxes though. What is the W-4 for then? Medicare, Social Security and Federal?
A. One of the more confusing parts of withholding relates to the W-4. So many questions and for some reason, so few answers. The W-4 is related to the federal income tax withholding. Federal income tax withholding is related to the tax that is owed toward your income tax liability that is calculated on the annual 1040 form. When you change your allowance value or marital status on the W-4, you are making a statement that the withholding you expect to have in total at the end of the year is not going to match your actual liability on the 1040. Federal withholding is calculated using the following formula, taxable wages minus allowances times the appropriate formula level in Publication 15. Social Security and Medicare taxes, while they are federal taxes, are not calculated or 'trued up' at the end of the year on your tax return. They are calculated differently as well. Social Security is 6.2% of the first $106, 800 of your taxable wages. Your employer matches this amount as well. Medicare is calculated as 1.45% of taxable wages with no limit. Your employer matches this as well. As you can see, there is no provision for allowances in these formulas. So, although I would be very happy to tell you that the W-4 would reduce these taxes as well, that would be incorrect. It will just change your federal income tax withholding sometimes called 'FIT'. On a side note, if you are changing your federal W-4, you may need to change your state W4 as well. Check with your tax advisor or CPA. You can get all of the state versions of these forms here.
Tax Day is on Monday, Apr 15, 2024. Not ready to file? Submit an electronic request to the IRS for an extension ASAP!
IRS has updated tax brackets for 2024. See how this affects your first paycheck this year!
Check out the updated 2024 Federal benefit limits for 401(k), HSA, and simple IRA, and more. Stay informed and plan your finances with confidence!