When hired to begin work where you will be paid as an employee of an organization or entity, typically there are two main options for tax withholdings. These are determined by your current filing status and then potentially the number of dependents that you will claim at the end of a given year. These can be changed at any time and variations can fluctuate from pay period to pay period but most individuals elect to keep the same status over time unless a change in the family dynamic constitutes a need for an adjustment.
The main options are whether you will be filling out a tax return as a married couple or single individual. The federal government then takes into account varying amounts which are taken from an employeeâ€™s paycheck in order to help constitute their coverage for the yearâ€™s tax bill. The employer then sends this amount to the federal government and depending on the amount withheld ultimately determines whether or not you owe taxes or receive a refund once the tax return is filed in the spring.
While there are multiple other factors which affect an individualâ€™s tax status and implications, these paycheck withholdings (if applicable) are a substantial part of the end result. Understanding your paycheck withholdings is critical in helping alleviate any unnecessary tax burdens and can assist in proper planning for the future.
Once a determination is made for the status - married or single - the next option is deciding which number to utilize. Beginning with zero, dependents can be claimed with most people electing to take either zero or one. The higher the number, less tax will be withheld from the paycheck leading to an increase in funds during the year but the potential for owing taxes come time for filing is also increased substantially.
Individuals who choose zero will have the most money withheld from their check with the likelihood of a bigger return at yearâ€™s end. However, there are a few additional options for withholding elections other than changing the withholding numbers or status. These include each of the following.
Married but Withholding at Single
- This application allows for an individual to have their taxes withheld at the higher rate. The effect of married withholding at a higher rate
allows for even more taxes to be paid into the federal government throughout the year.
Another option is for people to voluntarily have more taxes withheld. Choosing this allows for someone to pay as much as they want over what is already being taken. Even just a small amount over each pay period can accumulate a larger withheld amount over the course of an entire year.
If you need assistance with determining which rate and option is the best for your individual tax situation then the accounting experts at Bloch, Rothman, and Associates
will be pleased to assist you. Our associates can help ensure your paycheck works both to keep your family funded throughout the year and avoid the burden of a sudden tax situation at filing. Known for also providing expert tax advice and assistance, they can help with a variety of accounting, bookkeeping and any payroll options on an individual or business level. Whether you need an explanation for a random tax form, are potentially in need of appropriate representation in tax court, or could use help in potentially a variety of other various services our tax experts are ready and willing to assist. Call 303-321-7160 or contact us
for your initial free no obligation consultation.