Filling out Your W-4 by George Myers, BEP Accounting Specialist: Don't risk withholding too much or too little from your paycheck. It could hurt come tax time. Whether this is your first job or your 40th, filling out Form W-4 can be confusing. Doing it right can make all the difference when you file your tax return. To fill out Form W-4 correctly, you need to consider several possibilities. If you're being claimed as a dependent by someone else, working more than one job or receiving unearned income, the number of exemptions you may claim when filing your W-4 will be affected. Generally, if you are single, work one job, and no one can claim you as a dependent, you can claim single with one exemption. The status (single or married) is indicated on line three of Form W-4. The number of exemptions you claim is entered on line five. Am I exempt from Withholding? You can claim exempt from withholding only if you meet all of the following requirements:
- You did not have a federal tax liability last year.
- You do not expect to have a federal tax liability this year.
- Your total income is $850 or less.
- You did not receive more than $300 of unearned income (interest and dividends).
Being a student does not automatically qualify you to be exempt from withholding. You still must meet the other requirements. If you meet the requirements to file exempt, simply write the word exempt on line seven of Form W-4 and file it with your employer. Someone Claims You as a Dependent Your parents or someone else can claim you as a dependent if they provide more than half of your support for the year. If someone else will claim you as a dependent, then you are not entitled to claim your own exemption. When you complete your W-4, you indicate that you are claimed as a dependent by entering 0 on line five. Working More Than One Job If you are working more than one part-time job or a full-time job and a part-time job, you may need to compensate for the extra job by tweaking your withholding. Job A doesn't know how much income you make at Job B – therefore, the withholding will only be enough to cover what you earn separately at each job. In most cases, this isn't enough. Be sure to increase your withholdings at your primary job to compensate. If you are single and your combined income from both jobs will exceed $35,000, use the worksheet on page two of Form W-4 to compute what to claim for each job. This can help you avoid a balance due at tax time. If your income will be less than $35,000 for the year, you should be safe claiming the same number of allowances at each job. Income Other Than Wages Perhaps you receive a scholarship that is taxable, income from investments your grandmother gave you, you won a prize, or you are doing some self-employment work on the side. Your tax liability will include all of these items, so you should factor that in when completing your Form W-4. How can you do that? Here's an example: You determine that claiming one exemption will cover the money you earn from your wages, but some extra income is going to add $200 to your tax liability. The simplest way to compensate for that extra income is have an additional amount withheld from each paycheck. You get paid every other week; $200 over 26 weeks makes an additional $8 each pay period. Enter $8 on line six to cover the tax on that extra income. The worksheets provided with Form W-4 are designed to help you compute the exact amount of withholding you require. Be sure to use those to verify you are on the right track with your withholding. Visit http://www.fsafood.com/foodsafety/ for those with cafeterias to keep informed of food safety habits and policies. |
