(MoneyHippo.com) – When you get a job, your new employer will ask you to fill out an Employee’s Withholding Certificate (W-4) for tax purposes. Your answers on that form will determine how much money your new employer will withhold from your paycheck for tax purposes. Filling it out incorrectly could result in a big surprise at the end of the year when it’s time to file with the IRS.
- Tax Status: Many people don’t think about updating their W-4 when they have a baby, get married, or experience a divorce. This mistake can lead to your employer withdrawing the wrong amount of taxes, so consider how you will file with the IRS at the end of the year and report or change your status accordingly.
- Multiple Jobs: Many people answer the second question on the tax form incorrectly because they don’t realize it encompasses not only their second job or side hustle but their spouse’s as well. To answer this question properly, use the Multiple Jobs Worksheet and take care to use the appropriate tax status graph on page four to calculate your family’s appropriate earnings.
- Other Adjustments: It’s easy to gloss over this part of the form, and many employees do just that, but doing so can lead to a big tax bill. Instead, use the Deductions Worksheet on page three of the form to help you determine whether or not it’s to your benefit to have your employer withhold additional tax money.
Avoiding these common mistakes could help you reduce your tax liability to Uncle Sam at the end of the year.
Copyright 2022, MoneyHippo.com