What Do W-4 Forms Mean?

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    Use

    • Employers refer to the Form W-4 to determine how much money to withhold from an employee's pay for federal income taxes. The form indicates the number of personal allowances that the taxpayer may claim.

    Information

    • Form W-4 requires the taxpayer's name, address, Social Security number, marital status and the total number of allowances claimed. It includes a space in which the employee may instruct her employer to withhold additional income from her pay. This allows a worker who believes she will have to pay more federal income taxes to do so automatically and not have to worry about paying the IRS once income taxes are due.

    Worksheet

    • Form W-4 also comes with a worksheet that taxpayers may use to determine how much money to have withheld. Workers who intend to itemize their tax returns or those who may claim adjustments to income and who want to reduce the amount withheld may use the worksheet.

    Exceptions

    • While a Form W-4 form is often required for new employees beginning their job with an employer, there are some exceptions. Workers hired under a temporary contract, commonly known as freelance or independent contractors, are not legally considered employees and a Form W-4 is not required. Payment to the contractor of more than $600 a year necessitates the issuance to the contractor of Form 1099-MISC.

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