Tax Forms: Question Formation (Page 3 of 3) in pdf

Tax Forms: Question Formation Page 3

Line 5 can be tricky sometimes, but it’s crucial to write the correct number of

allowances. Just use the “Personal Allowances Worksheet” at the top of the form.

If you have no dependents and no spouse, you probably want to write “1” on line

5. Many people write “0”. That means you are likely to get a tax refund when you file

your year-end income tax. This may sound like a good idea, but it means that the IRS

had your money all year instead of you - money that you could have invested or used

for yourself. But, if you’re not much of a saver, it may be best to write “0”. Married

taxpayers filing jointly need to confer with their spouse so they’ll write the correct

number on line 5. Taxpayers with dependents generally write a bigger number than “1”

depending on the number of dependents, and the number of exemptions their spouse

has claimed on their W-4.

Line 6 asks if you want any extra money withheld from each paycheck. Most people

write “0”. If you expect you’ll owe a significant amount of federal taxes, you may want to

calculate a dollar amount for line 6 so that you don’t owe the Internal Revenue Service

(IRS) oodles of bucks at year-end. You only fill out line 7 if you had no tax liability (AKA

didn’t have to pay taxes) last year, and expect to be in the same situation again this

year. If that applies to you, write “Exempt” on line 7.

A federal W-4 form is only complete if you’ve signed and dated it. Most states also

have their own W-4 form to complete in addition to the federal form.

When you file your federal income tax in April and the amount you owe or the refund

you get is relatively small, then you probably wrote the correct number on line 5 of your

W-4. If you’re due a large refund and your situation looks similar for the next year, you

probably want to write a larger number on line 5 so you can keep more of your money

throughout the year. If you end up owing the IRS a significant amount of money, you

definitely want to lower the number on line 5, or fill in a dollar amount on line 6, so that

doesn’t happen again.

Exit Ticket

1. What is your most important question about Form W-4/filing taxes?

2. Why is this question so important?

Tax Forms: Question Formation Page 3