Monday, March 10, 2008

W-4 Withholdings- How much do you know what to take out?

When starting a new company, knowing how much one should deduct from their W-4 can make all the difference on whether or not you will owe the government at the end of the year. The amount of income tax your employer withholds from your regular pay, depends on two things:

* The amount you earn
*The information you give your employer on your W-4 Form

Form W-4 includes three types of information that your employer will use to figure your withholding
*Whether to withholding at the single rate or at the lower married rate
* How many withholdings allowances you claim (each allowance reduces the amount withheld).
*Whether you want an additional amount withheld.

When you start a new job, you must fill out a W-4 Form and give it to your employee. If you need to change the information, you must fill out a new form. Keep in mind that if you begin a new ( at the beginning of the year), too much tax can be withheld. If this happens, ask for a part-year method .In order to qualify for the part year method, you have to meet the following criteria:

* You must use the calendar year (January 1-December 31) as your tax year ( not a fiscal year).Furthermore, you must not expect to be employed more than 245 days during the year.

If you have questions concerning W-4 withhoings, or you have immediate tax debt , contact a licensed tax rep that is skilled in understanding the guidelines and practices per the IRS.

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