When you fill out a W-4 form, it allows your employer to deduct the right amount of federal income tax from your paycheck. The W-4 form shows your marital status and number of claimable withholding allowances -; the more of these you claim, the less is deducted from your pay. Your circumstances can change, and you should review these allowances on a yearly basis. However, if you claim more than a reasonable number of allowances, you can be penalized by the IRS.
If you do not file the W-4, your employer is required to withhold taxes at the highest rate, which is for someone who is single with no allowances. Tax preparation services in Manhattan will help you claim the correct number of allowances. You may be able to add allowances if:
* You are single and only working one job
* You are married with only one job and a stay-at-home spouse
* Your second job’s wages (or your spouse’s wages) are less than $1500
* You have a minimum of $1900 in dependent care expenses and plan to claim credit for them
* You’re filing as a head of household
* You plan to claim a child tax credit, which can be up to $1000 per child
Other Circumstances Determining W-4 Allowances
If you marry or get divorced, adopt or have a child, or buy a new home, you may be able to claim additional allowances. Those changing jobs, adding a second job, or retiring may be eligible to claim more. Increased self employment income, dividends, interest or itemized deductions will also affect the number of allowances you can claim. C York CPA can help you claim all of the allowances for which you are eligible.
Withholding Exemptions
If your income for the past year is more than $1000, you must have taxes withheld from your pay. If you have over $350 in unearned income (including dividends or interest), or if someone else can claim you as a dependent on a tax return, withholdings must be taken. If you cannot be claimed as a dependent, the threshold for withholding is much higher. Those owing no Federal income tax for the past year (and expecting none to be owed this year) may be exempt from withholdings. The Internal Revenue Service may ask your employer for your W-4 form; if they question your exemptions, be prepared to justify those claims. For help in gathering that documentation, consider using Tax Preparation Services in Manhattan.
