The Carr Report: Understanding how to complete Form W-4 Employee Withholding Certificate

A W-4 form, or “Employee’s Withhold­ing Certificate,” is an IRS tax document that employees fill out and submit to their employers. Employers use the information on a W-4 to calculate how much tax to withhold from an employ­ee’s paycheck. When you complete Form W-4, you’re instructing the employer on how much taxes to withhold from each paycheck. The W-4 Form takes into account vari­ous things including: filing status, mul­tiple jobs adjustments, amount of cred­its, amount of other income, amount of deductions, and any additional amount to withhold from each paycheck. Com­pletion of this form helps to compute the amount of federal income tax to deduct and withhold from your paycheck. Employees are required to fill out W-4 forms because the IRS requires people to pay taxes on their income throughout the year, as they earn it. If you have too little tax withheld, you could owe a sur­prisingly large sum to the IRS in April, plus interest and penalties for under­paying during the year. In 2020, the W-4 form changed to make the form easier to complete and to help individuals withhold federal in­come taxes more accurately from their paychecks. As with most things being changed to make it easier,...