What is the Form W-4

I learned many lessons  during the 2024 tax season.  One of the learned lessons is educating my wage earner clients about the form W-4.  I found it necessary to share this topic because of the plight of one of my clients.  My client chose Alpha Business Services to prepare his 2023 tax return.  However, it was discovered that the federal tax withholdings were minimum and insufficent to pay federal taxes owed.  In fact, the amount of federal withholding was much different than the prior year.  As a result, this client owed over $5,000.  It was later determined that his employer had changed payroll companies and the new payroll company failed to withhold taxes from the employees.  Lesson learned!!

Therefore, I have prepared a 3 part e-mail campaign regarding the form W-4. The following will be discussed:

  1. What is the form W-4?
  2. Steps to Completing the Form W-4
  3. Review Your Form W-4 for Accuracy

Let’s dive in!

Form W-4, Employee’s Withholding Certificate, serves the purpose of informing your employer how much federal income tax to withhold from your paycheck based on your filing status, number of dependents, and any additional income or deductions you expect to claim on your tax return. Its main purposes are:

  1. Determining Withholding Amounts: The form helps your employer calculate the correct amount of federal income tax to withhold from your wages. This ensures that you pay enough taxes throughout the year to avoid owing a large amount at tax time or penalties for underpayment.
  2. Personalization: It allows you to personalize your withholding based on your specific financial situation. Factors such as multiple jobs, income from other sources, deductions, and credits can affect how much tax should be withheld.
  3. Adjustments: You can use Form W-4 to adjust your withholding if you anticipate significant changes in your income or deductions during the year. This helps in managing your tax liability more accurately.
  4. Compliance: By completing Form W-4 accurately, you comply with federal tax withholding regulations and ensure that the correct amount of taxes are withheld from your earnings.

Overall, Form W-4 helps both you and your employer ensure that your federal income tax withholding aligns with your expected tax liability, making the tax filing process smoother and potentially preventing surprises at tax time.

You should check your tax withholdings every year and when you have a major life change, such as:

  • New job or other paid work
  • Major income change
  • Marriage
  • Child birth or adoption
  • Home purchase

It is my prayer that this information is informative, helpful, and leads to prosperity. If you have any questions, click on the link below.