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The W-4 Form Decision

It's your first day at your new job and there are enough forms to make your head spin. In addition to forms for direct deposit (bring your Social Security card, driver's license, and a deposit slip for your bank account), and benefits such as health care, there is one form you should fully understand: the W-4 Form, or the Employee's Withholding Allowance Certificate. This form directly impacts your take-home pay.

Essentially, this form tells employer how many "withholding allowances" (deductions) to use when determining your federal income tax. If you're curious about how much will be withheld from you paycheck, read Publication 15, Circular E, Employer's Tax Guide (available at www.irs.gov), which publishes income tax withholding tables. Inside, you'll find the Percentage Method Tables, and the Wage Bracket Method Tables (the most commonly-used tables).

In addition to a new job, you should fill out a new W-4 Form if you recently were married; had a child; lost a dependent; or expect a change in the number of your itemized deductions for the tax year. When amending, the new withholding allowances should take affect the first payroll period, which ends 30 days after you submit the form.

Also, if you are receiving a large tax refund each year, seriously consider amending your W-4. Essentially, you are lending the government money in those months without being paid interest. That money could have been earning interest in your cash accounts or investments instead.

  • Did You Know...?
    When you start a new job, fill out a W-4 (if you don't, your employer is required to classify you as single, with no allowances). If you falsely claim too many deductions in order to lower your taxes, you could be subject to a $500 fine.

  • Did You Know...?
    By January 31, your employer should have sent you a W-2 form, which is proof of your wages and tax withholding amounts (income and Social Security) for the year. If you did not receive the form, contact your employer to follow up; if you have no luck, call the IRS (800-829-1040) and ask for Form 4852, Substitute for a Missing Form W-2.

    If you are not an employee, but have earned $10 or more in gross royalties or $600 or more in rents or services, you will receive a 1099-MISC, which means you are regarded as an independent contractor. If you still feel that you have been mis–classified (and talks with your employer yield no results), you can submit a Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding.

More information is available at www.irs.gov This link will open an external site in a new browser. . Look for the following publications:

W-4

  • 2003 Form W-4 Employee's Withholding Allowance Certificate
  • Tax Topic 753, Form W-4 Employee's Withholding Allowance Certificate
  • Form 4506, Request for Copy or Transcript of Tax Form
  • Tax Topic 156, Copy of Your Return - How to Get One

W-2

  • 2003 Form W-2 Wage and Tax Statement
  • 2003 Inst W-2 and W-3 Instructions
  • Form 4852, Substitute for a Missing Form W-2
  • Tax Topic 752, Form W-2 - Where, When, and How to File
  • Tax Topic 154, Form W-2 - What To Do If Not Received
  • Form W-2C, Corrected Wage and Tax Statement

Independent Contractor Forms

  • Instructions for Form 1099-MISC
  • Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding
  • Publication 15-A, Employer's Supplemental Tax Guide

Tax Withholding Publications

  • Publication 505, Tax Withholding and Estimated Tax
  • Publication 213, Check Your Withholding
  • Publication 15, Circular E, Employer's Tax Guide
  • Publication 919, Is My Withholding Correct for 2000?

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The W-4 Form Decision

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