Question

My employer asks the number of allowances I want and additional withholding wanted. What do these mean? In a scenario, where an individual makes $8.00 per hour for a total of 11 hours per week and is paid twice a month, what would you recommend to be placed for additional withholding?

Answer 1

On starting a new job, you are generally asked to fill a form called W-4. This would help your employer to determine how much amount he/she needs to deduct from your wages for income tax. This amount can be changed depending upon the number of withholding allowances an individual decides to claim. When more claims are taken, the less amount is deducted from your wages for tax.

Allowances will be increased if you claim 'children as dependents' or 'spouse'. Some of the other scenarios that could increase allowances may include paying child care expenses and non wage income like dividends or interest.