Hananoy

Most employers are required to file an IRS W-4 form for each employee upon their employment. By using the exemptions and rates on the W-4 form, individuals specify how much of their salary should be withheld to cover income taxes. The government determines the exact amount to be withheld by factoring in two things. The first is the amount of money the employee is earning, and the second is the information provided on the W-4 form. This information includes how many allowances the employee claims, whether the individual requests an additional amount withheld, and whether the rates should be calculated at the single or married rate.

Employees should fill out their W-4 forms carefully and accurately. Having the proper amount of income tax withheld from one’s paycheck helps individuals plan ahead for filing their income tax returns each April. Not having income tax withheld results in the necessity to pay “estimated taxes” quarterly. While paying estimated taxes is not necessarily more costly to an employee in terms of total funds paid to the government, having tax withheld throughout the year significantly reduces the burden of calculating one’s own tax payment. It also prioritizes tax payments over other expenses, and facilitates each individual remaining in good standing with the IRS.