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Understanding Your Withholding Allowance on Your Form W-4

by | Jul 1, 2024 | 2024, Accounting, Tax planning, Taxes | 0 comments

If you’ve filed your taxes, you may be wondering what to anticipate and what steps you need to take next. One of the most important steps you can do is to check your paycheck to ensure that the right amount of withholding is being deducted.

How does this impact my withholding on my paycheck?

Individual tax rates in 2024 are: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. These rates will be reflected in the amount of federal taxes taken from your paychecks. The IRS modifies these individual tax rate brackets as part of the yearly inflation adjustment.

When you fill out Form W-4, you enable your employer to deduct federal income tax from your paycheck. In general, if you withhold too little tax, you will owe it when you submit your taxes. However, if too much is withheld, you will usually receive a refund.

Each year, federal withholding should be close to your total tax due so that you don’t owe anything at tax time.

When do I need to file a new Form W-4 with my employer?

If your personal or economic situation changes, or if you begin new employment, you should submit a new Form W-4 to your employer.

Form W-4, Employee’s Withholding Allowance Certificate, is completed and submitted to your employer so that they may determine how much tax to withhold from your paycheck. A W-4 form considers the number of individuals in your family, tax credits, deductions, additional income, and if you have more than one job or are a dual-income household.

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