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What employees need to know about income tax withholding
Whether someone is entering the workforce for the first time or changing jobs, filling out new hire paperwork can feel overwhelming. One of the forms employees must complete is a W-4, Employee’s Withholding Certificate. This form tells employers how much money to withhold from the employee’s pay for federal income tax.
It’s important for employees to know the correct amount of tax to withhold so they don’t owe too much money when filing their tax return or have too much money withheld from their paychecks.
Get tax withholding right.
If an employee doesn’t have enough tax withheld, they may face an unexpected tax bill and a possible penalty when they file a tax return next year. If they overpay or have too much tax withheld during the year, the employee will likely get a tax refund when they file their tax return. Adjusting the tax withheld up front may mean a bigger paycheck throughout the year.
Form W-4, Employee’s Withholding Certificate
People can also submit a new W-4 when their personal or financial situation changes and they want to update their withholding.
Taxpayers can use the Tax Withholding Estimator
Not all workers are employees
Keep tax forms in a safe place.
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