What Is the Purpose of a W4 Form?
Employers are responsible for withholding social security, medicare and income tax from employee checks. The goal is to accurately estimate the employee's total liability and divide it evenly over each paycheck. This is done based on information provided by the employee on Internal Revenue Service Form W-4. At the end of the year, the employee either owes money or receive a refund depending on the accuracy of the withholding estimates.
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Identification
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Form W-4 is a small, half-page tax form used to provide certain information to an employer. The document reflects the employee's tax status and other information used by the employer to calculate the amount of taxes that need to be withheld from an employee's paycheck.
Function
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The primary use of Form W-4 is for the employer to calculate withholding. It can also be used by the employee to request additional withholding. This often results in a tax refund the following year, and is done so the employee can help maintain a consistent budget.
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Features
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Accompanying Form W-4, but not submitted with it, is a Personal Allowances Checklist. Personal allowances, which include dependents and children, form the basis for an individual's tax exemptions. The greater the number of allowances, the lower the payroll deduction. Incorporated into the Personal Allowances Checklist are exemptions for dependent care and the child tax credit.
Itemized Deductions
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If an employee plans on making itemized deductions on his tax return and has more than one job (or a working spouse), he is directed in Line H of the Personal Allowances Checklist to complete the Two-Earners/Multiple Jobs Worksheet. Using a table to identify the appropriate income level, the worksheet helps adjust the withholding for this particular employer to more accurately reflect the employee's tax obligation at the end of the year.
Warning
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The information provided on a Form W-4 can be given by the IRS to other government agencies, including the U.S. Department of Justice as well as state and local agencies, for criminal investigation or enforcement of tax laws. Providing false information is fraud and punishable. Failure to submit a Form W-4 results in the maximum withholding.
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References
Resources
- Photo Credit U.S. Department of the Treasury
