Taxes 101 What are Tax Withholdings? Read the Article Open Share Drawer Share this:Click to share on Facebook (Opens in new window)Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Pinterest (Opens in new window)Click to print (Opens in new window) Written by Elle Martinez Published Feb 15, 2011 - [Updated Jul 10, 2019] 2 min read What are tax withholdings? How do they affect you? How can you change them to help out with your tax obligations? Below are answers to some of your big questions. Salary, Wages, and W-4s Have you noticed that your net pay on your paychecks is smaller than your gross pay? Why is it that? As you’ve probably seen, some of that money is allocated for various things such as Social Security, Medicare, retirement, health insurance, and , of course, taxes. How does your employer know how much to take out? Based on your answers on the W-4 you filed out when you were first hired, the Human Resources department automatically deducts a certain portion of your pay to cover your tax obligations for the year. In the United States the tax system is pay as you go, so as the year progresses and you earn income, you employer has a portion of your paycheck allocated for taxes. If you’re self-employed you have to withhold your own taxes and pay your estimated taxes throughout the year yourself. Reasons You’d Want to Change Your Withholdings There are several good reasons why you would want to go ahead and change your tax withholding for 2011. You want to reduce the big tax refund you received. Some people prefer to get their money throughout the year so they can spend, save, or invest it the way they want to. You have a change in filing status. If you got married or divorced, your filing status affects your taxes and you may want to update your W-4. You have a child. When you change the number of dependents you have, your tax obligations can change. Make sure you have the proper amount withheld. If you have any questions as to whether or not you should change your W-4, have a brief appointment with your company’s Human Resource department to get more information. They’ll be happy to help you out. How to Change Your Withholding Why is it important to have the correct tax withholdings? You’re expected to pay 90% of your tax obligation as you earn it throughout the year. If you’re not sure what you’re withholding should be, the IRS has an online calculator to help you figure out how to properly fill your W-4. Changing your W-4 is as simple as going to your HR department and requesting a new form. Follow the guidelines (and use the online calculator if needed) and fill out the form accordingly. When completed, submit it to Human Resources so they can have the your paychecks reflect the new amount. Thoughts on Tax Withholdings How many of you have adjusted your tax withholdings? Are you planning on doing so this year? Why or why not? Previous Post Switch Jobs? How to Keep the Tax Man Away from… Next Post Cash Income Tax (How to Report Cash Income to the… Written by Elle Martinez Elle helps families at Couple Money achieve financial freedom by sharing tips for reducing debt, increase income, and building net worth. Learn how to live on one income and have fun with the second. More from Elle Martinez Visit the website of Elle Martinez. Follow Elle Martinez on Facebook. Follow Elle Martinez on Twitter. 2 responses to “What are Tax Withholdings?” Do i need to complete the IRS form with my husband or can we do it separate Reply You seem to be ignoring us who have been retired for years. We also need tax help. At age 77 WE still paid over 80K in federal alone. DICK Reply Leave a ReplyCancel reply Browse Related Articles Self-Employed How to Determine My Federal Income Tax Rate If I’… Life Overpaid Tax: Why It Matters to You Tax Planning Tax Withholdings and Your W-4 Life Overpayment of Taxes: Everything You Need to Know Income What is FICA Tax? Tax Planning Payroll Tax Defined ( What It Is & How Much Is It) Tax Tips Nanny and Housekeeper Tax Rules Tax Tips Tax Tip: Changing Tax Withholdings Tax Planning Holiday Bonus Taxes Education Prep for Post-Grad Life With These 5 Financial And Tax …
You seem to be ignoring us who have been retired for years. We also need tax help. At age 77 WE still paid over 80K in federal alone. DICK Reply