W-4 Reminder

While this may seem like common knowledge, I am surprised how many people don't know what the W-4 form is. This is a small reminder.

When you take any job as an employee, you will have to fill out some paperwork on the first day and the W-4 will be included in the list.

The W-4 is the form that determines how much money your employer withholds from your paycheck. The amount that gets withheld from you paycheck is the amount that goes to the federal government, state government, and social security.

Not all employers will explain this to their employees. When you fill the form, you have the options to claim allowances. The more allowances that you claim, the less money that gets withheld from your paycheck.

Keep in mind that however you fill out the form, it will not affect the amount you actually get paid.

If you claim no allowances, you will have the most amount of money taken from your paycheck every cycle. Most likely, this will lead to more money being withheld from you within a year and you will most likely receive a large refund when you file your taxes. Conversely, if you claim an many allowances as you legally can, you will have the smallest amount of money withheld from your paycheck and you can expect to receive a very small refund at the end of the year or possibly owing money to the federal or state government.

Which option is better? It depends on the person.

Personally, I like to receive the most money from my paycheck every cycle. I'd rather have more money all year round rather than just wait for a large amount in February. I'd rather pay the government money owed.

People who are really hard pressed for cash may also prefer having the most money in every paycheck.

If you want to change the amount that is withheld from your paycheck, I think you can talk to your employer and request to change your W-4. A good reason to update your W-4 is if you get married or have children because you will be able to claim more allowances if you wish.