Yo yo yo, CPA strength here! Strong CPA in the house, you know what I'm saying? This is going to be about the W-4. I've been watching some videos on how to fill out W-4s, and let me tell you, they're out there! But I just want to quickly explain the big picture of what a W-4 is. It simply affects how much federal withholdings your employer takes out of your paycheck. That's it! The W-4 helps your employer determine the amount of federal withholdings they should take out, based on the allowances you claim. These allowances are used to estimate the amount of taxes you will owe at the end of the year. Let's say we calculate all your different incomes from various sources, and then factor in your deductions (whether you itemize or take the standard deduction), credits, and other taxes owed. This will give us your tax liability. For example, if your tax liability is $1,000, it means you owe the government $1,000. This amount is then compared to your federal withholdings. Ideally, we would like to see your federal withholdings equal your tax liability. In other words, if you owe $1,000 in taxes, we want your federal withholdings to be $1,000 as well, resulting in no additional payment or refund. When you fill out your W-4, you provide this information to your employer. It includes your name, social address, and the number of allowances you claim (typically up to 5). There are also worksheets to help you determine the appropriate number of allowances based on your specific circumstances. Now, here's the tricky part. The higher the number of allowances you claim, the less federal withholdings will be taken out of your paycheck. This is because higher allowances indicate more deductions and credits, which in turn lowers your...
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Video instructions and help with filling out and completing Which Form 2220 Allowance
