Paycheck Tax Deduction Estimate

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Paycheck tax deduction estimates are made when filing out a W-4 form. Try to have around 90 percent of taxes for the year withheld from a paycheck to avoid paying penalties or wasting money. Make the right calculations and adjustments to a W-4 form when preparing for taxes with advice from a certified public accountant and personal financial planner in this free video on taxes.

Part of the Video Series: Tax Law, Real Estate & Credit Tips
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Video Transcript

My name is Miranda Chook, a CPA. This segment is about form W-4, your withholding allowances. This form is the one that you typically fill out when you start a new job and you tell your employer how much of your pay you want withheld for federal tax purposes. The goal is to have about 90% of the taxes due for the year withheld during that year. Much less and you might be subject to penalties and interest. Much more and you're basically giving the government an interest free loan instead of having that money work for you. Now if you do not itemize deductions you just need to use the personal allowances work sheet to calculate the number of allowances and just put that on the form and turn it back in to your employer. If you do itemize deductions you need to use the deductions and adjustments work sheet to calculate your allowances to avoid having too much withheld during the year. Now if you have more than one job or if you're married and you and your spouse both work you should use the two earners multiple jobs work sheet to make sure you have enough withheld during the year. For more information refer to the instructions for the W-4.

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