Monday, December 13, 2010

Help with completing your W-4 Form

We often get questions on how to correctly fill out the W-4 form, specifically line 5 - Number of Allowance. This seems straight forward but usually isn't. The easy way to remember how to fill this out correctly is the LESS allowances you claim on the W-4, the more federal tax will be withheld from your paycheck. Example: Claim 0 allowances and more tax is withheld than claiming 5 allowances. The IRS provides a worksheet to help you claim the proper number of allowances, which will take into account any itemized deductions you may be entitled to claim. Note that this does not guarantee a refund if you claim less allowances. If you claim 5 allowances based on the worksheet and then, when your complete your federal tax return and only have 2 exemptions (you and your spouse) and don't hit the itemized deduction threshold, you may very well end up writing the IRS a check. Everyone loves a refund or at least not owing tax. Use to get your best tax results.