These Aren't Your Parents' Taxes (Part 7)–Your W-4

The Top 10 Things for 18-25 Year-olds to Know About Taxes

8)  W-4

If you’ve ever worked a job (for a reputable business, that is) then you’ve filled out a W-4.  You may not have known what you were doing, but you filled it out.  Here’s some info that should help you figure out how to make it work better (or at least more efficiently) for you.

You fill this out so your employer can withhold the correct federal income tax from your pay.  You’ll be asked if you are single or married and how many allowances you have.  If you’re single and don’t own a home, you’ll probably enter 1or 2.  Keep this in mind—the higher the number you write down on your W-2, the less is withheld.  While this sounds like a good thing up front, it could lead to you owing taxes at the end of the year.  I’m not going to tell you what to do, but hopefully the form makes a little more sense.

We’re hitting the home stretch.  Just two more–stay tuned tomorrow.  The last two are worth it!

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