-You got your first job and you have in your hands the Employee Withholding Exemption Certificate or the w-4 form and you probably have no idea why your employer asks you to complete it, but the sure thing is that you need to fill it out completely in addition to understanding the importance of this simple but important form.
What is the Employee’s Withholding Allowance Certificate
The Employee Withholding Exemption Certificate It is Form W-4, from which you indicate to your employer your marital status, discounts in withholding and the amount that the employer must use when deducting federal income tax from the employee’s pay.
You must complete the entire w-4 form because otherwise your employer will be required to withhold federal income taxes from your wages as if your marital status were single, without any right to claim a discount on that withholding.
Discounts in the retention rate
As an employee, you may want to change the discounts on your withholding rate for many reasons, such as if you change from single to married.
When the employer receives the revised and completed form from an employee, it must be current at the beginning of the first payroll period that ends 30 days after the form with the changes made has been received.
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Form w-4
Form w-4 can be downloaded and printed on the official website of www.IRS.gov/español And even the employer can order several forms online, consulting Ordering for information returns and employer returns or if you are an employer you can call 800-809-3676.
But you can also create it yourself with a spreadsheet as long as you do it the same as the official form and complying with the IRS rules on substitute tax returns, but you cannot accept a substitute form created by an employee because it will be considered that you have not filed any form.
Form w-4 includes spreadsheets with details to help the employee make the correct calculation of deductions in withholding. In fact, employees can use the IRS withholding calculator to complete the form and in the event that you are a non-resident alien you must follow the special instructions to complete it.
How I fill out the Employee Withholding Exemption Certificate
The Employee Withholding Exemption Certificate, consists of several sections and each of them must be completed as follows:
Section A: Write “1” if you do not have someone in your charge.
Section b: Write “1” if your marital status is single and you have only one job. If your marital status is married, you have only one job and your spouse does not work, or your salary from the second job or the total salary for both is $ 1,500 or less.
Section C: Write “1” for your spouse or you can enter “0” if your marital status is married and you have a spouse who works or has more than one job (Entering “0” can help you avoid having little tax withholding)
Section D: Enter the number of people who depend on you, other than you or your spouse, so that you can claim on your tax return.
Section E: Enter “1” if you will be filing as head of household on your tax return.
Section F: Enter “1” if your child and dependent care expenses reach $ 2,000, not including child support expenses.
Section G: Section G corresponds to the child tax credit including the additional child credit.
If your income is less than $ 70,000 or $ 100,000 and your marital status is married, enter “2” for each child for each eligible child,
Enter “-1” if you have two to four eligible children or “-2” if you have five or more eligible children.
If your total income is between $ 70-84,000 or $ 100-119,000 and if your marital status is married, enter “-1” for each eligible child.
Section H: Enter the total sum of A and G. here.
Employee Withholding Exemption Certificate or form w-4
If you are an employer, you must inform your employees about the importance of submitting the W-4 form and completing it accurately.
In fact, if an employee submits the form that results in a less than appropriate withholding tax, they could be subject to a $ 500 fine.
Process
Once the employee has completed and signed the w-4 form, they must keep the records for at least 4 years.
The form is subject to inspection, so it could be requested through a notice or published guides that the employer send the forms to the IRS and it is for this reason that it is necessary that you be able to supply a hard copy of the electronic form.
Fixed withholding letter
The IRS uses the information on the forms to identify employees who do not comply with withholding tax. In cases where insufficient withholding issues are discovered, the IRS may send a notice specifying each withholding and the maximum amount of withholding discounts that are allowed for that particular employee in order to calculate the required withholding.
The IRS gives the employee the opportunity to dispute the decision to modify the withholding tax pursuant to the fixed withholding letter.
In turn, the IRS will send a letter to the employee with explanations about the need to start withholding additional taxes on wages, unless the employee contacts the IRS to explain the reason why they should have an increase in withholding. .
Even the letter provides you with the toll-free phone number, the address of the unit that runs the program, and as added protection, you will receive a notice for the employer to deliver to the employee.
After the fixed withholding letter takes effect, in the event that the employee wishes to claim the total exemption from withholding, the withholding rate, discounts or an additional amount that is less than the income tax withholding that is fixed by the fixed withholding letter, the employee must contact the IRS by calling the number provided in the letter or by going to the address of the unit that is in charge of managing this program.
Information for the employer
When the employer hires an employee, they must ask them to complete Form W-4, Employee Withholding Exemption Certificate.
The form tells you the marital status, the amount of withholding discounts, and any additional amount you must use to deduct the employee’s federal income tax.
In the event that the employee does not complete the form, they must withhold federal income taxes from wages as if they were single and cannot claim any withholding discount.
Likewise, the employer must inform employees about the importance of presenting the form and accurately.
Invalid Form W-4
Any change or addition to the form makes it lose all validity, that is, it eliminates everything written, even if the employee has certified that it is correct. It is also invalidated by the alteration, damage or overwriting made to the form.
It even loses validity if on the date the employee submits it, he indicates in some way that the form is false.
When the employer receives a form that is not valid, he should not use it to calculate the withholding of federal income tax, since he must inform the employee that the document is not valid and therefore he must request another.
But if the employee does not provide him with a valid form, the employer must withhold taxes as if his marital status was single and without the possibility of claiming discounts on withholding. However, if you have a valid and old form, the employer can withhold the taxes as it did before.