Question

As a wage earner, the taxpayer pays Federal income tax by having it withheld from his or her pay during the year. The withholding is based on the number of allowances he or she claims when filing Form W-4 - Employee's Withholding Allowance Certificate, with an employer. All of the following are true regarding the completion of Form W-4 except:

A. A taxpayer can claim any number of allowances

B. If the taxpayer has not changed jobs, he or she generally does not have to give his or her employer a new Form W-4 each year

C. The taxpayer should try to have his or her withholding match his or her actual tax liability

D. If an employer cannot withhold enough additional tax from the taxpayer’s wages, he or she may need to make estimated tax payments

Answer 1

A. A taxpayer can claim any number of allowances

Explanation: If a taxpayer is filing as a single person, living on his own with one job and no dependents, then the total number of allowances he can claim is two. If a taxpayer has dependents, he will have a more detailed tax form and can declare an allowance for each of his qualified dependent. Therefore, the above statement does not holds true regarding Form W-4.