Tax Form W4: All you Ever Wanted to Know!

The tax form W4 is a very simple form used to withhold federal income tax from the salary or wages of an employee. Why tax withholding on salary? Because IRC section 3402 legally binds employers to withhold tax on payment of salary or wages and deposit the same to the government treasury. Therefore, as an employee, you must fill out this W 4 Form and submit them to your employer.

What is tax form W4 all about?

The tax form W4 is simple and requires the following information; many are optional. The tax form W4 helps the employer to comply with the law for withholding federal tax on the payment of salary or wages. The W4 form requires very little personal information and concentrates on the most basic information about the income of the wage earners. This gives a clear picture as far as the amount of withholding on tax is required. The following information is sought in tax form W4

• Name– Required
• Address– Required
• Social Security number– Required
• Marital status– Required
• Any additional amount you want to be withheld for each paycheck-optional
• Whether you are claiming exemption from withholding-optional
• No of dependents for tax deduction
• Your employer’s name and address-– Required
• Your first date of employment– Required
• Your employer identification number– Required

Where to get tax form w4?

IRS has put on its website the latest information related to Form W-4 and the fallible forms and instructions. Download the tax form W4 and read the IRS instruction on W4 below the form.

Video: How to fill out a tax form W4?

Filling out the W4 form is quite easy as the form requires only basic information. Further IRS has also created an estimator web app to assist the employee in properly estimating income for tax withholding purposes. Watch an introduction on how to fill out w4

Tax form W4 deductions calculator

Should you use the IRS tax estimator for filling out tax form W4?

The purpose of the tax withholding estimator web app for the taxpayer is to help you with your proper tax withholding calculation. An adequate estimate of your current income and estimated tax can help you decide if you need to change your withholding with your employer. You should try the IRS estimator at www.irs.gov/W4App if you:

1. Expect to work only part of the year;
2. Have dividend or capital gain income or are subject to additional taxes, such as Additional Medicare Tax;
3. Have self-employment income (see below); or
4. Prefer the most accurate withholding for multiple job situations.

How to fill out the tax form w4 form with two jobs?

Form W4 has a separate sheet called Multiple Jobs Worksheet in case you have more than one job at a time or are married, filing jointly, and have a working spouse. This is so because your multiple employers don’t withhold taxes based on your total salary. The easiest thing to do is to withhold at a higher rate.

Multiple Jobs Worksheet for tax form w4 -Video Explanation

When to fill out the deductions worksheet of tax form W4?

You need to complete the Deductions Worksheet of tax form W4 only if you are not planning to claim a standard deduction. In other words, you may go for itemizing your deductions or claim certain credits on your income tax return.

Fill Out the Deductions Worksheet 

How to claim W4 exemptions?

There is no threshold amount for withholding taxes from an employee’s wages. … However, there are some exceptions in which a person can claim exemption from tax withholding through the same Form 4. Here are two conditions that must be satisfied for claiming exemption from tax withholding on your salary or wages.

1. One year earlier, you had no federal income tax liability. So, you are claiming W4 exemption for 2022, you must not have any federal tax liability in 2021, and 
2. Even in the year of claiming exemption, no federal income tax liability. (say in 2022)

Basically, you should not have tax liability In the year of the claim as well as one year before for claiming exemption from tax withholding from salary.If you claim exemption, you will have no income tax withheld from your paycheck and may owe taxes and penalties when you file your 2022 tax return.

To claim exemption from withholding, certify that you meet both of the conditions above by writing “Exempt” on Form W-4 in the space below Step 4(c). Then, complete Steps 1(a), 1(b), and 5. Do not complete any other steps. You will need to submit a new Form W-4 by February 15, 2023.

W-4 vs W-2. What’s the difference?

Both form W4 and form W3, have different purposes. A W-4 is the tax form you fill out and give to your employer so that the employer deducts the tax at source properly and the correct amount on the payments of salary. But W-2 is a form prepared by the employer if it withholds taxes on your salary or wages and is given to the employee generally near the beginning of the following year. This helps you in filing tax returns as W2 is the certificate of income paid in the form of salary or wages.