Most working people are familiar with a W-4 form. W-4 forms are required to be filled out and returned to your employers HR department usually upon hire. The W-4 form plays an important role when income taxes are filed.
A W-4 form supplies your employer as well as IRS with important information about the employee. This particular form contains information about an employee including name. address, social security number as well as number of dependants.
There is really no law in force that dictates how many dependants, if any an employee must claim. An employee has the option to declare zero dependants if desired. However, it is important to take a number of things into consideration before deciding what to declare as far as dependants or exemptions are concerned.
Considerations Prior to Completing W-4 Form:
Before completing information on the W-4 concerning dependants, the person must consider their total gross income, amount of family members in a household and if there is another working spouce residing within the home.
It is always nice to have extra money in your pocket when you are working. There are certian things that can be done so that the employee ends up with more cash in their pocket each time they are paid. Therefore, the amount of money the employee takes home each week leaves them more pocket or spending money.
Declaring Dependents/ Exemptions:
In most cases if an employee declares themselves as a dependant or exemption they will take home more money each week. Therefore when filling out a W-4 form the employee must declare âoneâ dependant on the appropriate section of the W-4 form.
Keep in mind even though an employee may take home more money each week, they may end up paying or owing more income tax the following year. For example, if an employee declared one dependant as a witholding allowance within the 2014 year; this would be reflected when filing their income tax in 2015.
More Take Home Pay/ Paying Higher Income taxes:
In some ways putting more money in your pocket each week is helpful. However, in most cases the employee needs to be prepared to pay additional taxes when tax season comes around. It is best to speak with a seasoned accountant if you have any questions concerning deductions, exemptions as well as other withholdings.
A new W-4 form should be filled out each and every year for as long as an employee remains with the same employer. You can always change the number of dependents or exemptions claimed.