How do I fill out the W-4? What number do I claim on the W-4? What is the difference in my paycheck if I change my allowances/exemptions?
You’ve probably seen the IRS Form W-4. It’s one of the many forms employers give you to fill out once you get hired. The purpose of this form is to let your employer know how much income tax for the Feds and State you want taken out of each paycheck.
The general rule behind the amount of allowances/exemptions you claim on your IRS Form W-4 or equivalent is this: The lower the number you claim (zero being the lowest), the more tax the payroll department at your job will take out of your paycheck, and the lower the amount you will owe at the end of the year. Therefore, if you want to stay on the safe side of IRS, claim single 0 on your W-4. If you end up paying more tax on your paycheck than what was owed, you will get a refund on your tax return at the end of the year.
You may prefer having more money in your paycheck than getting a refund or owing at the end of the year, but that is a more complicated issue, as you will need all the facts to get the most accurate answer. Not only that, but usually Congress and the IRS do not determine the tax rates until the end of the year, so payroll may not have been accounting for the different tax rates.
If you want to know the exact amount of allowances or exemptions to claim, and what the various allowances or exemptions will do to your paycheck, give us a call for a consultation.
E-filed tax returns: Once the return is accepted, the IRS issues most refunds in less than 21 calendar days.
Paper filed returns: The IRS can take anywhere from 6-8 weeks from the date the IRS receives your tax return to issue a refund.
You can now check the status of your refund on Where’s My Refund? Check within 24 to 48 hours after e-filed tax returns, and four weeks for paper filed returns.
When the IRS begins processing your tax return, the Where’s My Refund? tool will show “Return Received” status. You will not see a refund date until the IRS finishes processing your tax return and approves your tax refund.
Once the IRS finishes processing your tax return and confirms your tax refund is approved, your status will change from “Return Received” to “Refund Approved”. Sometimes the change in status can take a few days, but it could take longer — and a date will not be provided in Where’s My Refund? until your tax return is processed and your tax refund is approved.
The IRS will provide a personalized refund date once your status moves to “Refund Approved”. If the status in Where’s My Refund? shows “Refund Sent”, the IRS has sent your tax refund to your financial institution for direct deposit. It can take one to five days for your financial institution to deposit funds into your account. If you requested that your tax refund be mailed, it could take several weeks for your check to arrive.
Some tax returns take longer than others to process depending upon the situation. Some of the reasons it may take longer include incomplete information, an error, or further review. The sooner you e-file your return, the sooner you’ll get your tax refund.
The answer depends on the amount you owe.
Owe over $1,000 – Yes, you will need to make a payment when you file your tax return. The amount of the payment needs to be at least enough to get the balance down below $1,000. The reason for this is because you will be getting hit with the underpayment of estimated tax penalty. To stop the penalty from continuing to accrue, you will need to get the balance below $1,000.
Owe under $1,000 – No, you will not need to make a payment when you file.
Keep in mind that any outstanding tax balance is due by April 15th. If you have the means to pay for your tax balance, save yourself the headache, and pay as soon as possible.
You can pay the IRS when you file, online, smartphone app, by mail or by phone.
When filing: If you e-file, you can pay using your bank account with the IRS Electronic Funds withdrawal. You can choose the date and amount to be withdrawn; however, note that all tax liabilities are due by April 15. Some e-filing softwares also allow the use of debit or credit cards, just be aware that there may be a processing fee.
If you paper file your return, you can pay by sending a check or money order along with the return through the mail. Be sure to make the check or money order out to the United States Treasury, and write down your Social Security Number (SSN), as well as the year and form number, in the memo line or at the top of the check
Online using bank account information: IRS Direct Pay is the website to use when paying the IRS online. You can use your checking or savings account to make a payment or schedule a payment. You will need a copy of your tax return or (or tax ID for businesses) handy to reference information that will be asked. This is a free, secure, and fast way to make a payment with instant confirmation after payments have been made.
Online using debit or credit card: Use this link to choose from various websites that offer the service of paying the IRS with a debit or credit card. You will need a copy of your tax return or (or tax ID for businesses) handy to reference information that will be asked. Be aware there are processing fees associated with every transaction.
Smartphone App – IRS2Go is the IRS’s app which can be used to pay with a bank account or debit and credit cards.
Phone: Individuals – 800-829-1040
Mail: The IRS address you mail a check or money order to depends on your location as well as the reason for payments. Check the link to find out where to send your tax payments to. Be sure to make the check out to the United States Treasury, and write down your Social Security Number (SSN), as well as the year and form number, in the memo line or at the top of the check.
If you’re a sole proprietor (as in, you’re the only one running the business and you are not legally incorporated), simulate withholding by putting aside 25 to 30% of your income into a savings account. You should pay your estimated taxes quarterly to the IRS and any relevant state revenue agency to avoid fines. The amount that needs to be paid according to the IRS is either 100% of last year’s taxes or 90% of your current estimated tax bill. However, the safest bet is to pay 30% of your income to the IRS every quarter, as your income will change.
Estimated quarterly tax payments are due April 15, June 15, September 15, and January 15 of the following year. (These quarters are not equal in length so don’t let the June deadline surprise you!) Make payments by mail, phone or online. Use the form 1040-ES to mail your estimated payment. Pay online using the Electronic Federal Tax Payment System (EFTPS), or pay by phone at 1-800-829-1040.