W-4 Form: What Is It?
A W-4 form is used for tax purposes, and it is filled out by an employee when they first begin employment. This form provides the employer with the information about the employee's tax withholdings from earnings. It is important for an employer to collect W-4 forms from their employees so that they can deduct the appropriate amount of taxes from their paycheck.
The employee who is filling out the W-4 form will need to provide some information, such as how many dependents they have, any tax credits, and their social security number. It is important to be accurate with this information, as it will determine how much taxes a person owes.
A W-4 form should be updated as needed. If there are any major life changes, such as getting married, divorced, or having a baby, the form should be changed to reflect this. This ensures you won't owe a lot of taxes when you file.
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Contents of a W4 Form
Most businesses require new employees to fill out a W4 form. The W4 is perhaps the most standard declaration of income. As such, the IRS has made the form streamlined and easy to fill out. While you get a three page document downloading it from the site, only the first page really matters; the rest are details and instructions. The IRS site provides free W4 forms that can be printed and filled out. However, the form itself can seem awfully baroque, and so we've broken it down below and explained the W4's two major components. Let the following explanation serve as a template for W4 completion.
The W4 form is comprised of a template with a sequence of lettered items. The first component of a W4 form is the Personal Allowances Worksheet. Item A is about whether or not someone else claims you as a dependent. Most employed adults will put 1 on this item. Item B asks whether you and your spouse put together have one full time job between you two. If you are unmarried, you put 1. Item C asks if you have a non working spouse. It is effectively the reverse of the question above. If you do not have a spouse, or if they have a full time job, put zero. If you have a second job or an unemployed spouse, put 1. D is about the number of depends, which usually means children. E is about whether you are the head of household. F is an extension of D, asking you to estimate the cost of raising your children. Most folks with depends will probably enter 1. G is about your overall household income and the number of dependents. The final item on the first part of the W4 form is H. It asks you to add up A through G. For a single head of household, item H will be 1. It will vary depending on the marital status and number of dependents.
The second component is the Employee Withholding Allowance Certificate. Items 1 through 4 of the W4 template are standard name and address questions. Item 5 asks you to repeat the number you put down for H. If you had a full federal tax refund last year or expect to get one this year, then write “Exempt” in Item 7. Finally sign the document and put down the employer’s name and address. You don’t need to find the office code or EIN, depending on the situation.