When you draw wages from an employer, you submit a W-4 form that instructs the employer how much to withhold from your pay for income taxes. The employer deducts that amount from your paycheck and submits the money to the Internal Revenue Service (IRS). Withholding allows you to make a regular deposit toward your income tax liability for the current year. You can adjust your withholding at any time, simply by requesting another blank W-4 form.
Married and Single Tax Rates
Single and married taxpayers use different income tax brackets. For single filers, for example, the 10 percent rate applies if you have up to $8,500 in taxable income. Married filers (who are filing joint returns) pay 10 percent on income up to $17,500. The tax rates follow at a higher income level for married/joint filers, until you reach $379,150 in taxable income, when married/joint and single filers are both subject to a 35 percent rate.
Your employer withholds according to the number of allowances that you claim on your W-4 form, as well as your filing status (married or single). Figure the allowances by filling out the Personal Allowances Worksheet that comes with the W-4. On Line A, you enter "1" for yourself; on Line B you enter "1" for your spouse if he/she does not work or earns less than $1,500; on Line C you again enter "1" for your spouse. You can also add allowances for dependents, for certain expenses, and for the Child Tax Credit, if you have children under 17 living with you.
Use the Personal Allowances Worksheet for your calculations; you don't need to submit it to your employer or the IRS. If you want to adjust your withholding, submit a new W-4 with a revised number of allowances. On Line 5 of the W-4, increase the number of allowances for lower withholding at the married rate, or decrease the allowances for higher withholding at the single rate. There is no legal requirement for any particular rate, as any underpaid taxes will be payable when you submit your tax return. If you want to exempt yourself entirely from withholding, you enter "Exempt" on Line 7 and follow the IRS rules for doing so.
If you are married and your spouse earns self-employment income or other income from which no taxes are withheld, you can also have your employer withhold additional money from your paycheck. You fill out Line 6 of Form W-4 with the additional amount. Your spouse can also pay estimated taxes throughout the year to the IRS, in order to avoid a big tax bill when you file the return, as well as the penalties and interest that the IRS may charge on overdue taxes.
Founder/president of the innovative reference publisher The Archive LLC, Tom Streissguth has been a self-employed business owner, independent bookseller and freelance author in the school/library market. Holding a bachelor's degree from Yale, Streissguth has published more than 100 works of history, biography, current affairs and geography for young readers.