Life Changed but your W-4 Didn’t: Why You Need to Update Your W-4 Withholding

If you paid a large tax liability bill after filing your taxes, you might want to update your W-4 Form.

Are your friends on a summer vacation (thanks to their tax refund checks) while you’re stuck at home because you were forced to write a check for your tax due?

If you ended up writing a large check to the IRS for the total of your tax liability, it’s good to know that you’re (somewhat) in control of  what that total will be next year. Surprisingly, it isn’t some randomly generated number, nor is it based on luck. In fact, it’s linked to the number of allowances listed on your W-4 form. That means, you’ll want to take a look at the number reported on your W-4 Form.

What a W-4 Form Is & How it Affects your Tax Refund

For those of you unsure of what a W-4 form is- it’s one of the forms you were handed upon your first days of employment at your job. To be more precise, a W-4 form is used by your employer to determine the amount of taxes to be withheld from your pay. The number of exemptions claimed on it directly affects your tax refund or tax due.

Continue reading “Life Changed but your W-4 Didn’t: Why You Need to Update Your W-4 Withholding”

Help Filling Out a W-4

Your W-4 is an important thing to get right because it ultimately decides how big your tax refund is – or if you owe the IRS money

If you are an employee, you pay income tax through withholding – tax money your employer takes out of your paycheck each pay period.

You can determine how much gets taken out by filling out Form W-4 [Employee’s Withholding Allowance Certificate]. If too much gets taken out, you will receive a refund when you file taxes. If not enough is taken out, you will have to pay the IRS.

You will be asked to fill out a W-4 when you start a new job. But you can also fill out a new W-4 any time if you wish to adjust your withholding. You should especially be sure to do so after major life events such as getting married or the birth of a new child.

How to Fill Out the Form

The first part of the form should be easy enough. It’s just your personal information: name, address, social security number, etc. Continue reading “Help Filling Out a W-4”

Release of Dependency Exemption – Form 8332

This form can release a child’s dependency exemption to the noncustodial parent

Children can be a great boon to your tax situation, because they often mean a larger refund. But in cases of divorce or separation, children can also make tax returns much more complicated than they would be otherwise.

In these cases, certain decrees or settlements may necessitate the custodial parent signing over the child’s dependency exemption to the noncustodial parent.

In order to do this, you must file Form 8332 [Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent].

Use this form if you are the custodial parent and you want to Continue reading “Release of Dependency Exemption – Form 8332”