Withholding: Introduction

The government withholds your expected tax payment as you earn it, so filling out the W-4 form accurately will assure that you aren't giving them too much now.

Look at every paycheck you get: There are federal taxes withheld. They take their share now and on April 15, you settle up with them -- either you get some back or you pay them more. Determining how much you pay each week is done on the W-4 form. Here we'll explain how to fill out the form so that you won't owe Uncle Sam money at the end of the tax year -- or worse, have to wait for a refund of the money you've overpaid. We'll also remind you to adjust your withholding if you've had a change in your life status, such as a new baby or a new house.

What you can expect to learn from this chapter:

Filling out your W-4   What is the W-4 and what is "pay-as-you-earn" taxation? Form W-4: the beginning of your working life   Learn what "allowances" are and how many you should claim so that you come out even when tax-filing season comes around. Working through the W-4 worksheet   The nitty-gritty of filling out your W-4 and what other deductions you might want to consider. Plus, a link to the IRS's interactive W-4 worksheet. Understanding and avoiding underwithholding   The government wants its share of you money as you earn it. Find out the consequences of not paying enough and when you must pay estimated taxes. Checking and adjusting your withholding   Have you had a life change of some kind -- a new baby, marriage or a new house? Here's how you should adjust your withholding. Chapter 1 quiz   Three easy questions will tell you that you learned all about withholding.