When you get a job through WSI, one of the pieces of paperwork you’ll fill out is IRS form W-4. The purpose of a W-4 is so that WSI can withhold the correct federal income tax from your pay.
Why is the W-4 important?
It’s extremely important to fill out this form correctly because the IRS requires people to pay taxes on their income gradually throughout the year. If you don’t fill out the form properly, it could result in owing a surprisingly large amount in April. Additionally, you could also face penalties for underpaying your taxes during the year (and nobody wants that).
On the contrary, if you withhold too much tax, your paychecks will be smaller than what you’re used to.
When determining how much to withhold, the IRS Online Withholding Calculator can help provide an accurate depiction based on your current situation.
When should I file a new form?
Starting a new job is one situation where you would need to fill out a new W-4. Other situations that might warrant a change to your W-4 include having a child or picking up a second job. It’s also important to note that you may change your form at any time, not only when you have a life-changing event. If you identify that you are having too little or too much in taxes withheld, it’s not the end of the world – you can still make a change!
The Bottom Line
It’s important to take the time to calculate your withholdings properly. By doing so, you’ll avoid having to pay penalties at tax time and will keep as much of your earnings as possible.
At the end of the day, we don’t know your full tax situation. If you have questions about your withholdings please refer to the IRS Online Withholding Calculator. Happy calculating!