You typically filed a new form when you started a job or needed to adjust your tax withholding. In the past, the W-4 was based on a system of withholding allowances. These payments will count toward your annual income tax bill that you will calculate when you prepare your return the following year.
Once you've filled out your W-4, your employer will then withhold money from your paycheck and send to the IRS. Not paying enough during the year can result in a tax bill and perhaps a penalty, while withholding too much can create a refund when you file your tax return.Ī refund sounds nice, but getting one usually means that you could have had more take home pay in each paycheck. This will ensure that the IRS collect federal income tax from you in a timely manner. The W-4 form provides information to your employer so that they can determine how much to withhold from your paychecks. This document is used to report the necessary information related to your tax situation, and employers use this to calculate how much federal income tax to withhold from each of your paychecks. To make sure you withhold the right amount of taxes, you will need to submit some paperwork when you start a new job - specifically, a W-4 Form. Some types of income are specifically excluded from taxation, but when you work as an employee and earn above certain amounts, you'll almost certainly need to pay taxes on your earnings to the federal government. In most cases, if you earn money, the IRS expects you to pay taxes on it.
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