tax

W-4 and Dependents

Starting a new job can be stressful in itself. With so many new things to learn, one of the dreadful things that you have to start getting used to is learning to pay your taxes. The W-4 form that is the Employee withholding allowance certificate, that your employer will give you to fill will be a documentation that your employer will withhold a specified amount from your paycheck which will be paid as income tax. The form filling is pretty straightforward that is until you come upon section five, which will ask the total number of allowances you will be claiming.

The W-4 form that is the Employee withholding allowance certificate, that your employer will give you to fill will be a documentation that your employer will withhold a specified amount from your paycheck which will be paid as income tax.

To fill this you will have to look at the upper part of the form where you will find the Personal allowances worksheet. Each allowance that you will claim will reduce the amount that your employer will withhold from your paycheck. Now stop before you claim as many as allowances that are allowed, because obviously that is not allowed. Go through the following steps:

If no claims you as a dependent, then you must claim one allowance. Like if you are young and applying for a par time job or an internship where you are required to fill out the W4 form, you cannot claim an allowance as, your parents or guardians probably have you claimed as their dependent.

In case you are single and have one job or if you are married with a spouse who is not currently working, you can claim second allowance. If your wages from a second job or if your spouse earns less than One thousand and five hundred dollars or equal to that amount you can claim second allowance. Basically if there is only one source of stable income, you can claim second allowance.

You can claim one allowance if you have a spouse, however if you have a second job that pays good or a spouse with a stable income, you might not claim any allowance.
If you have a dependent other than that your spouse like a child or a relative that is dependent on you financially, you can claim one allowance. It must be noted that any pets you may keep may take up your expense, but are not allowed to claim allowance on them.

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Social Security Number

by Kylee Sanders

Social Security Number is a nine-digit number issued an individual by the Social Security Administration, which is an independent agency of the United States government. This number is given to U.S. Citizens, permanent residents and also to the temporary (working) residents. Though this number is basically issued to keep a track of the individuals for Social Security purposes, but over the years it has become a national identification number for individuals in the country for taxation and other financial purposes.

People who do not have a SSN find it difficult to engage in financial activities such as applying to open a bank account or applying to get a loan from the banks.

The Social Security Numbers were first issued in 1935 as a part of the New Deal Social Security Program started by President Franklin D. Roosevelt after the Great Depression. It was originally sought to track individual’s accounts in the Social Security program. But today it has one to be used as an identifier for individuals in the country. Interestingly, Social Security Cards which were printed during January 1946 to January 1972, had expressly written on them that, not for identification, message, but it has been in use for identification purposes and the message was thus removed.

People who do not have a SSN find it difficult to engage in financial activities such as applying to open a bank account or applying to get a loan from the banks.
Although the card on which SSN is printed cannot be used for individual identification as there is no photograph, no birth date, no physical description of the person. So, for these purposes documents like a driving license should be used.

The SSN is a number arrange in this manner AAA-GG-SSSS. This number is divided into three parts. The first part is assigned by the geographical region from the card is issued. The middle part consists of group numbers ranging from 01to 99 in odd and even numbers.
The last part consists of four digits which are serial numbers in numerical sequence of digits ranging from 0001 to 9999.
The Social Security Administration on a general level does not reuse SSNs. Till now, 450million numbers have been issued since 1935, and the Social Security Administration says that it would need to reuse the numbers for several generations.

Internal Revenue Service Extension

by Ryan Kendall

Many events can happen in our lives especially when unexpected leaving us unable to file taxes by that April deadline. Luckily the IRS or Internal Revenue Service has an option available for those who find themselves swamped in work or other life events that keep them from getting taxes ready when they are due. The internal revenue service extension is a form found on the IRS website available for when you find yourself needing it most during an unusually stressful tax season.

The internal revenue service extension is a form found on the IRS website available for when you find yourself needing it most during an unusually stressful tax season.

So if you find yourself unable to file your individual federal income tax by the due date which is typically around April 15th, form 4868 can be completed for a possible 6 month extension depending on if you qualify under whatever your circumstances may be. Check out the special rules that may apply if you are serving in the military or living overseas. There are also a number of other tax extension forms including the form 7004 and 1138 for corporations and businesses. Form 7004 for certain business income tax and to request an automatic extension. Form 1138 differs in that it is an extension for corporations or business who need to pay a tax but are expecting a loss.

There are also other extension forms available for those who fall under special tax credits, employee returns and others. Check out the IRS webpage to find the form that is right for you. While six months may seem like a lot of time to catch up on filing, often this time goes by quickly. SO make sure you have all the right paperwork needed to get the documents filed correctly. Work with a tax expert to ensure that your needs are met.
While an internal revenue service extension can help you better prepare and organize your tax information, remember that while the extension is more for people who need more time filing and not for more time to pay taxes where they are owed. Check with the IRS about possible payment plans and other relief if you need more time to pay. With an extension to file, the IRS expects that paper work by October instead of the initial April deadline. So make sure you get going and reduce late payment penalties if needed.

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Number of W-4 Allowances

by Ryan Kendall

Claiming a number of W-4 allowances begins with knowing the number of personal and dependency exemptions you claim on your tax return. Make sure you get it right! The number of allowances you claim determines your tax withholdings as well as the size of your refund. So limit the surprise around the time you file taxes. So how many allowances can you claim and why?

Claiming a number of W-4 allowances begins with knowing the number of personal and dependency exemptions you claim on your tax return.

If you claim zero allowances that typically means that someone else is claiming you on a tax return such as a spouse or legal guardian or you have zero dependents. The maximum amount of tax is also withheld meaning that you would get a return if you file one. If you claim one this typically means you are single and hold one job while if you claim two, it typically means you are married. It can also indicate that you hold two jobs and are claiming two allowances at one job and zero at the other. Or you can simply claim one allowance at each job- whichever you prefer. While this option will get you closer to your tax liability it may result in due taxes so make sure you check up on that with the IRS.

Claiming three allowances typically means you are married and have one child. While most claim between 0-3 allowances there is an option to claim additional allowances for other purposes if needed. These other purposes include filing as head of a household that has many people, claiming child payment and other credits, and if you are eligible to claim a child tax credit. Before filing a W-4 make sure you know which allowance is the best option for you especially if you want to receive the best available return.
If you find that you need to resubmit a W-4 because of changes in your life, employment or feel you have made a mistake, filing a new form is acceptable. Changes in the number of W-4 allowances that you may want to note are in case of a divorce, a new child or number of dependents in your home, or a new marriage. The number of allowances you ultimately end up with on your W-4 will eventually determine your pay after taxes and your return during tax season. So make sure you fill out the form correctly especially to determine if you are eligible for a refund.

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W-4 Tax form

by Kylee Sanders

The W-4 tax form is used by your employer so that the correct amount of federal income tax can be withheld from each of your paychecks. This form is one of the most incorrectly filed out forms. In filing incorrectly, you will either have too much money taken out of each check, causing a large refund to be issued at tax time or too little to be withheld, causing money to be owed at tax time. Learning how this form affects you can save you stress and provide better financial planning.

The aspects that affect the number of exemptions you can claim are: your dependents and/or children, your number of jobs, the number of income earners in the household, your filing status, and if you itemize your deductions on your tax return. In order to help determine the number of exemptions you can claim, you will need to use the three worksheet found on this form: the Personal Allowance Worksheet, Deduction and Adjustment Worksheet, and the Two-Earner/Multiple Jobs Worksheet.

With this form, as long as you are not under the age of eighteen (or twenty-three and attending college), you should always claim an exemption for yourself. This is going to be the first line of the Personal Allowance Worksheet. The next line concerns your marital status and if there is only one main income for the entire household. You can claim an exemption on line C for your spouse. If your spouse works (one or multiple jobs) or you have multiple jobs, it may be better for you not to claim an exemption on this line to prevent too little tax from being withheld. Lines D, F, and E, all concern your dependents and childcare expenses. You will total up these allowances on line H, but keep in mind that this number may not be the same as the exemptions you are able to claim on your tax return.

The 2nd page of the W-4 tax form has the Deduction and Adjustment Worksheet and the Two-Earner/Multiple Jobs Worksheet. You would only use the Deductions Worksheet if you estimate qualifying deductions such as medical expenses, state and local taxes, mortgage interest, and charitable contributions will be more than ten percent of your income. You should use the other worksheet if it applies to you or your spouse.

Filling out this form correctly, will have an effect on each of your paychecks and also on your tax return. You should consider updating this form yearly or as changes occur, such as marriage, childbirth, divorce. But keep in mind, the less exemptions you take, the more federal tax will be withheld from your paycheck.

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