The W-4 Form is an IRS form that helps you determine the number of dependents you wish to claim to correctly deduct federal income tax to be withheld from your paycheck. It’s an 8 question form that even comes with instructions. So why do 40% of Americans incorrectly fill it out?
In my opinion, any forms that directly inhibit my salary would be a top priority for me to understand. Even if it means having to ask a question that someone else might feel elementary. I suppose it goes back to the element that most people don’t completely read most worksheets that they put a signature to. I honestly love taking out a little more each paycheck in order to get a big return at the end of the year. It’s the highlight to my Spring season.
It’s also a wonder to me why the word “exempt” is one of the biggest misunderstood parts of the United States Tax subject. To be “exempt” doesn’t mean to take out the full amount of taxes. It means take out none. Almost like claiming to the IRS that you want to be taxed like a 1099 contractor (which I won’t even get into right now). It even tells you right next to the box that you expect to have “no tax liability.” Again, going back to not reading the details.
Maybe one day, when we have standardized taxation and government funded health insurance, we could remove this painful burden of the W-4 from the American employee. Until then, we’ll have to hope the instructions aren’t tossed out like yesterdays IRS notices.
The Finance Pig, LLC 