UK Accounting Glossary
A W-4 form is a US federal tax form on which the employee defines the number and nature of personal exemptions from income tax they are claiming. The W-4 form is then used by the employer to determine the amount of federal income tax withholding from the employee’s paycheck. The IRS advises that employees file a new W-4 form whenever their tax liability circumstances change. The W-4 form comes with the Personal Allowances Worksheet and the Deductions and Adjustments Worksheet which employees can use to calculate tax allowances and adjustments that they enter into the W-4 form. Typically, a single person working one job whom nobody can claim as a dependent will claim one allowance on a W-4 form (i.e. enter “1” on line 5 of W-4 form). Additional allowances can be claimed on the W-4 form for situations where the employee is head of their household, has dependents, has child care expenses or a child tax credit. Further adjustments and deductions can be specified on the W-4 form if the employee has more jobs than one or lives in a household with multiple earners (i.e. working spouse). An employee exempt from withholding is still required to fill a certain section of the W-4 form (i.e. lines 1 thru 4 and line 7) and sign it. The W-4 form also contains the employee’s private and contact details as well as their Social Security Number. The W-4 form is named the Employee’s Withholding Allowance Certificate.
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This glossary post was last updated: 5th February 2020.