How to Fill Out W-4 Forms Correctly

Video Transcript

"My name is Miranda Chook and I'm a CPA and we're going to talk about the IRS W-4 form for allowances. Now this form is typically the form you fill out when you first start a job and you can revise it any time and one of the main differences between this form and other IRS forms is this one goes directly to your employer and what you're doing is telling your employer how much of the salary you negotiated with your boss that you want them to withhold for you and remit to the IRS on your behalf. The goal is to have at least ninety percent of the taxes that you're going to owe at the end of the year withheld during the year. Much less and you might be subject to penalties and taxes. Much more and you're just giving the government an interest free loan instead of having that money work for you. Now the form itself is rather straight forward. Just your name, address, social security number, but one of the lines that's a little trickier is line five which talks about the total number of allowances and there is a worksheet for you so. This will help you calculate your personal allowances. So just go through the decisions and it's just a yes no and then it'll tell you how many that you need to, you qualify for and how many to put on your worksheet. Further, if you actually itemize deductions on your tax returns, there's another worksheet that will help you go through some yes-no questions to see if there is any adjustment that you might need to make to your W-4. And finally, if there are two earners in your family, there's another worksheet that you may need to go through and calc, do a few calculations to see if, again, you might need any further adjustments to your W-4. And remember, you can revise this form at any time."