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W-4

Ask the taxgirl: Do I Have To Take The Making Work Pay Credit?

March 25, 2009 · 0 comments

Taxpayer asks:

Dear taxgirl,

Can a taxpayer refuse to have the credit on their paychecks and receive
the full credit on their 2009 return? Also – are they changing the tax
table for 2009 to help with this credit?

Taxgirl says:

The answer to the last question is the easiest: yes, the tables have been changed so that employers can adjust the withholding. We received one of those lovely newsprint IRS pubs at our office just last week. If you are an employer and didn’t receive one – and want one – you can download it from the IRS website as a pdf. If you use an online or third party payroll service, the changes have probably already been made effective for April 1, 2009, but I’d confirm with them just to be sure.

The answer to your first question is a little more tricky. It’s one of those that I get to answer with a “lawyer answer”: yes and no. It’s no in the sense that the employee can’t go up to the employer and insist that the employer use the old tables – that would cause serious confusion (and I mean that, speaking as an employer). But if an employee is concerned about having to refund money at tax time because he or she is a dependent on another taxpayer’s return or other consideration (such as taxpayers with multiple jobs), the employee can certainly adjust his or her withholding on a form W-4.

You can make an adjustment on your form W-4 by changing the number of withholding allowances on the form. When you claim zero, the highest amount of tax will withheld. The more allowances you claim, the less tax will be withheld. So, if the goal is to have more tax withheld (since the new credit withholds less tax), adjust your allowances down. If you’re already claiming zero and still want to make an adjustment, you can indicate an additional dollar amount by writing it in on your W-4.

If all of this seems a bit confusing, give the IRS Withholding Calculator a whirl. Be aware that it’s not yet been updated to reflect the new tables. I expect that to happen on or about April 1.

Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.

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Ask the Taxgirl: Withholding

January 12, 2007 · 0 comments

Taxpayer asks:  I just changed jobs and I don’t know how many exemptions to claim for withholding.  Help!

Taxgirl answers:  This is one of those questions that is really fact specific:  it depends on your individual circumstances.  That said, since I’m getting a fair number of questions about withholding, I’ll attempt to pass some general information along.

  1. Check out the link to the IRS withholding calculator.  It’s not a substitute for the federal form W-4 but it can help you figure out how many exemptions to claim.
  2. You need to consider your marital/filing status, number of dependents, pay frequency and pay amounts in order to complete the form W-4.   If any of these things have changed since you started employment, you should submit a new form W-4.
  3. Local and state tax withholding are generally automatic – unless you are not a resident of the city or state where you work.  If you are not, you should check the individual rules to determine what you will need to file in addition.  For example, if you live in Philadelphia but work in Wilmington, Delaware, you are still subject to the City Wage Tax even if it is not being withheld; conversely, if you live in Wilmington, Delaware but work in Philadelphia, you are subject to the City Wage Tax which will likely be withheld for you at the employer level.  Despite the loud grumblings about wage taxes in cities like New York City and Philadelphia, a large number of smaller municipalities and townships have similar taxing schemes – check with your employer to see what’s being withheld and check with your local government to find out how your local taxes work.
  4. If you have special circumstances, you may also want to check out IRS Publication 919, available on the IRS web site.

Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.

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