YOUR MONEY: Understanding how to fill out the W-4 form – WAFB

BATON ROUGE, La. (WAFB) – Whenever you start a new job there’s always a stack of paperwork to fill out.
Buried in there is something called a W-4 form or an Employee’s Withholding Certificate. Everyone must fill out this form.
The W-4 helps your employer figure out how much money to keep from what you earn. That money is set aside for federal income, Social Security along with state and local income taxes.
You can make changes to your W-4 form to make sure more of that money ends up on your paychecks instead of getting a large tax refund from the IRS.
At the end of the day that’s your hard earned money. It just comes down to when you want it.
Nathan Grant, a Senior Credit Industry Analyst with MoneyTips, shared some advice to navigate through this process.
If you want more money on your paycheck every month, Grant said claiming more deductions and tax credits on your W-4 form will decrease the amount of your tax being withheld from your pay. This would increase the amount of each paycheck and in turn, this will reduce any refund amount you may get when you file.
“The new version of the W-4 that was introduced in 2020 eliminated the option to claim other personal withholding allowances to lower the amount of federal income tax withheld from your wages. Now, you must claim dependents or use a deductions worksheet,” Grant said.
On the other hand, if you put a “0″ on line 5 of your W-4, you are saying that you want the maximum amount of tax taken out of your pay each pay period.
“This will make each paycheck lower, but should ultimately lead to the biggest possible return,” said Grant. “As long as your personal situation doesn’t include other factors that could change things.”
How should you fill out the form if you are married or have children? Most married couples file joint tax returns, but sometimes filing separately might be a better option for you.
“If there’s a wider gap between a couple’s respective incomes, and the spouse who makes less is eligible for sizable itemizable deductions, it could be worth filing separately. Be aware that by filing separately, you might not be eligible for certain tax credits and limits on deductions, like Earned Income Credit, Child Tax Credit, and more,” Grant said.
Here’s another piece of advice – everyone has a different situation so what might be better for one person could put someone else into financial hardship come tax time.
“Even though a fat tax return check may sound good, the ideal situation is to not owe or get too much back when you file,” he said. “The more accurately you fill out your W-4, the less likely you are to owe or get money back when you file your annual income taxes.”
If you think you have a complicated financial situation reach out to a financial advisor for help.
Remember, you can always go to your payroll department to ask to make changes to your W-4 form.
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