A W-4 is the form that tells your employer how much they should withhold in taxes. If you've ever found yourself just staring at the form not sure what to make of it, you're not alone! Those forms can be slightly frustrating, but the basic thing you should remember is that the more allowances you claim on your W-4, the less income tax will be withheld and vice versa. So, if I claim one and you claim two, more taxes will be withheld from my paycheck than yours.
You should review your W-4 each year after you've completed your tax return, and you can make adjustments to have more or less income tax withheld. The form gives some guidance as to what exemptions you should select, but this IRS Withholding Calculator is a helpful tool.
Your W-4 may be outdated if your life has taken a new direction in any of the following ways. To find out what they are
- You went to a wedding where you were the bride.
- You went through labor.
- You bought or sold your pad.
- You switched jobs or stopped working.
- You started writing checks for college tuition.
- You've been paying big medical bills.