Your W-4 Form and the Tax Aftermath

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Tax Day has come and gone, and it’s a great time of the year to revisit what your W-4 form looks like!

Did you owe taxes this year?  Were you expecting to have received a larger tax refund? Are you or one of your employees in  the groups of people who supplied the federal government an interest free loan last year and  are  now getting a refund? It is that time of year that questions arise concerning federal withholding allowances .  The most frequent concerns after tax season deal with wondering whether or not you claimed the correct number of allowances.

See also: A Surprising Look at Tax Burden on Small Business

Federal taxes are calculated based on 3 factors:

  1. Wages earned
  2. The frequency in which they are earned
  3. The number of exemptions that are claimed.

Depending on what you are claiming for exemptions, you have to make a certain dollar amount before federal taxes start to deduct from your paycheck. i.e. – an employee claiming S-4 on a weekly payroll will need to make at least $350.00 before $1.00 will come out of your check.

How to Use the Income Tax Withholding Tables

If you have any questions about how federal withholding is calculated, you can look at the tax tables here in the Publication 15 PDF.

Rule of thumb, the more exemptions you claim, the fewer taxes will come out of your check. If you are M-6 and would like more taxes to come out of your check, you will need to claim fewer exemptions. If you would like less tax to come out, you will need to claim more exemptions. The Personal Allowances Worksheet on the W-4 form provides you with guidance but you may also contact your accountant to figure out the number you need to claim. Please be aware that we are not licensed to give legal advice so your accountant would be the best resource for more specific instructions.

Time To Update Your W-4?

If your personal or financial situation has changed, you or one of your employees might want to consider completing a new W-4 form. Please be aware that we cannot take W-4 changes over the phone but would require a completed and signed W-4 form to make the changes.  For those employees who claimed exempt for 2014, their exemption will expire on February 17th, 2015. If they would like to continue to claim exempt, they will need to complete another W-4 form. Otherwise, they will be changed to S-0 until a new form has been received. Although our payroll department endeavors to make changes as soon as a new W-4 is received, please allow up to the start of the first payroll period ending on or after the 30th day from the date the revised form is received for it to be put into effect.

As always, if you have any questions or concerns, please do not hesitate to contact us and we will assist you in any way that we can. Have a great day!

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