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Now is the Time to Change W-4 Tax Withholding

By November 20, 2023Payroll

At year-end, it’s important for employees to revisit their tax withholding to make sure it’s correct. There’s still time to make adjustments and avoid unpleasant surprises come tax season.

If an employee has claimed exemption from withholding and had zero federal income tax deducted, he or she must have a current Form W-4 on file. A W-4 claiming exemption from withholding is only valid for one calendar year, so employees with zero withholding must submit a new W-4 each year. To continue to qualify as exempt, the employee must have had no tax liability for the previous year and no expected tax liability for the current year.

Who Should Reevaluate Their Withholding?

Employees may benefit from double-checking their withholding if they haven’t looked at their paystubs or made any withholding changes in a while. In general, they may want to adjust withholdings if they:

  • Received raises or bonuses since the previous tax season.
  • Were surprised by how much they owed in taxes last year.
  • Have zero withheld from their entire household.

Employees also may want to adjust withholding if tax laws have changed in a way that affects them or they have had lifestyle changes such as marriage, divorce, childbirth or buying a home.

How to Know How Much to Withhold in Taxes

The IRS offers a convenient tool called the Paycheck Checkup to help taxpayers determine if they are having the right amount of tax withheld from each paycheck.

What Employees Should Do to Change Withholding or Claim Exemption

To make any changes to their withholding, an employee should complete a new Form W-4, Employee’s Withholding Allowance Certificate and submit it to the employer. The employee will also need to change the withholding for state taxes using their state’s withholding form. If an employee wants to claim exemption from withholding, he or she must complete a new Form W-4 and change their withholding status to ‘single’ or ‘zero.’

MarathonHR offers comprehensive outsourced payroll services, including the correct withholding and payment of payroll taxes. We are just a phone call or email away if you have questions or need ongoing support.

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