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Aug 21, 2018

Editor’s Note: This post was originally published on January 18, 2017. The content was updated August 21, 2018. 

Your W-4 form. 
In many cases, you probably don’t even think about it past your first day of work. But then something happens - you get married, start a new job, have a baby - and you need to take a closer look. That’s when your mind starts scrambling with questions. 

Furthermore, the Tax Cuts and Job Act has changed federal tax withholding, certain tax credits, and has encouraged a new version of Form W-4. 

Below, you’ll find the top questions we’re asked about the form.

What is Form W-4?
 This is a tax form used by employers to determine how much federal income tax to withhold from your paycheck.  

What is my filing status? Employers look at your filing status to determine your correct tax filing requirements, standard deductions, and more. You have a few options for your filing status that the IRS breaks down for you here

Can I change my W-4 after starting a new job? Yes! Usually, people change their W-4 forms when a significant life event occurs, for example getting married or having a baby. 

I’m an independent contractor, do I need to submit a W-4? No, independent contractors do not need to file a W-4. For more information check out, What is the Difference Between a 1099-MISC Contractor and a W-2 Employee? 

How many W-4 allowances should I claim? This is a tricky question as everybody has a different scenario. Furthermore, you will have to adjust the number of allowances you claim as you continue in your life. For example, as an adolescent, claiming zero allowances is recommended. If you are married and have a child, you might want to consider claiming three allowances. 

We recommend taking a look at this article and talking to a licensed tax professional to determine what’s best for your situation. 

What happens if I claim fewer allowances? In general, the fewer allowances you claim, the more federal income tax will be withheld from your paycheck. If you withhold too much income tax you are entitled to a tax refund. 

What happens if I claim more allowances? In general, the more allowances you claim, the less federal income tax will be withheld from your paycheck. If you do not withhold enough income tax you are expected to pay the government what you owe. You may also be forced to pay a penalty. 

Am I exempt from tax withholding? You can use the W-4 to claim exempt from withholding. This means your employer will not withhold any tax from your paycheck. You may claim exempt if you don’t expect to incur a tax liability for the current year, and did not incur a tax liability in the previous year. 

Do I have to fill out a new W-4 each year? This one is up to you. Normally, you don’t have to fill out a new W-4 unless you change jobs, or a life event happens as mentioned in question three. Keep in mind the IRS intends to have a new version of the W-4 available in 2019. 

For more on this topic: Important Information Regarding The 2018 and 2019 Form W-4  

How do I fill out my W-4? PaycheckCity’s W-4 Assistant can help you fill out your W-4.    

How has the Tax Cuts and Jobs Act impacted my withholding? You might have noticed a bigger paycheck! The change in the tax code has changed the standard deduction, Child Tax Credit, and the IRS is working on a new version of the W-4. 

For more information on this question read, 5 Tax Changes in 2018 You Should Know

Employer Questions

As an employer, you have your own set of questions regarding Form W-4. 

Depending on your employee’s familiarity, the process of completing the form can be confusing or a breeze. Every employee has their own experience and scenario to report on his or her W-4. It’s important to get withholding information as accurate as possible. The W-4 can have a major impact on your employees’ finances and therefore their quality of life.

Below are a few questions you might have when it comes to your employee’s W-4. 

When does my employee have to fill out a W-4? Your employee should fill out another W-4 when a life event, such as a marriage or birth of a child occurs. Your employee can complete a new form when he or she feels like his or her withholding is not accurate. 

How do I help my employees with their W-4s? If you want to help your employees, you have several options. For one, the IRS provides instructions on completing the form. You can also walk your employees through the language used in the W-4. For example, explain allowances, filing status, and dependents.  

What do I do when my employees want to change their allowances? No problem! Encourage your employees to submit another W-4 reflecting their scenario. 

What do I do with my employee’s W-4 after completion? After your employee has completed his or her W-4 make sure to collect it and store in a safe place. Businesses are required to hold on to each employee’s W-4 for up to four years. 

Do you still have questions about your W-4? Join the conversation at Payroll Talk!

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