Withholding Tax Calculator

The amount of Withholding Tax deducted on your paycheck is based on the information you filled out on W-4 form.  Usually W-4 form is given to you when you start employment with a company.  You can change the information on W-4 by filing out a new W-4 form.  Talk to your HR department or your manager.

Item #5 is the most important questions on Form W-4 regarding Withholding Tax.  (Q5: Total Number of allowances you are claiming).  If you’re single, you should enter 0 on line#5.  If you have dependents, then you should enter the number of dependents on line#5.

form-w4-2009

If you’re unsure what to fill out, use the calculator from IRS

Withholding Calcuator

General Rule:

If you put “0”, the employer will withhold the maximum allowed tax for the federal and state. Employer are not keeping the tax; rather they withhold the amount from your paycheck and send the money to the government. At the end of the year when you file your personal income tax, depending on your income and personal situation, you might be qualified for a refund.

If you enter “3, 4, 5, 6, etc” on the exemption box (line#5 of W-4 Form) the employer will take less money from your payment. The higher the exemption number, the less the employer will take from your payment. Warning: If you put too high of an exemption, you might own the government alot of taxes at the end of the year.