I received a market adjustment to my salary a few weeks ago, which increased my income. I already have my W4 set for 2 exemptions (myself, spouse). No kids as dependents any longer. My employer has explained that the new W4 doesn't really focus on exemptions any longer, so not much to change there. In using the IRS tax withholding calculator, it was suggested to take out an additional $100/paycheck to help decrease my tax liability. Also, my husband receives Social Security and does not have Federal tax taken out, therefore, we end up paying about $900 at tax time. Best option is to have the extra $100/paycheck taken out so I don't increase my tax liability any more than it already is?
It sounds as if you know exactly what you need to do!
Once you complete the form, give it to your employer. Then, keep a close eye on your next few paychecks to see how the changes impacted your federal income tax withholding.
Adjusting your tax withholding isn't difficult. All you need to do is fill out a new Form W-4 and give it to the correct department at your employer.
The required information can usually be found on your prior year's tax return or your current pay stubs. You'll need to make adjustments for changes from the previous year to make sure it reflects your current situation.
- W-4 form with instructions
- TurboTax and IRS W-4 Calculators:
IRS W-4 :
- Remedy to increase withholding from paycheck:
Remove the Child Tax Credit from Step 3 (Claim Dependents), this will remove the credit and allow the employer to withhold more taxes.
- Additional Withholding in Step 4 (c) – Extra Withholdings – put an amount here to be withheld each pay period.
- Link to the IRS FAQ regarding W-4s.
FAQs on the 2020 Form W-4
Hope the above helps!
**Mark the post that answers your question by clicking on "Mark as Best Answer"