Form W-4

The W-4 form tells the employer the correct amount of federal tax to withhold from an employee's paycheck.

An employee may claim allowances for oneself, one's spouse, and any dependents, along with other miscellaneous reasons, such as being single with only one job.

[3][4] Over-withholding can occur if, for example, an employee receives a one-time bonus, or only a partial year is worked, as it may only take into account the current paycheck, rather than the year-to-date amount.

One must provide some personal information and report the total allowances and additional withholding amounts on the actual form.

If one expects a deductible loss from a business or rental activity or investment, for example, withholding can be adjusted to account for the resulting reduction in the tax bill.

Alternatively, or in addition, the employee can send quarterly estimated tax payments directly to the IRS (Form 1040-ES).