The Internal Revenue Service (IRS) is very fond of forms with numbers that often confuse taxpayers. So it is with Forms W-4 and W-2 - they are related, but serve completely different purposes.
What is a Form W-4?
Whenever you go to a new job, in the pile of stuff you sign, there's probably a Form W-4. It tells you how much you should deduct from your earnings to pay federal taxes. And exactly how much depends on several factors. Marital status and the number of children, for example, are important.
Each W-4 form has instructions explaining what is the basis for the deduction (allowance). For example, a single person with no children can claim only one allowance, while a married person with five children will get seven if he or she wants one.
Neither the agency nor your employer expects you to do all the math and do all the calculations yourself. You only need to enter the number of allowances, and your employer will take care of the rest. You do not have to write the amount on the W-4. It is perfectly all right to write "zero. In reality, you can be the head of the family, for example, and have a spouse and children.
What is a W-2 tax form?
The W-2 is closely related to the W-4.
This form is issued by your employer at the end of the fiscal year (after December 31st) and contains information about your income and tax deductions for the entire period of employment.
During your first week in the U.S., you will be required to complete a Form W-4 (certificate of tax deductions taken into account in determining how much tax an employer withholds from an employee's paycheck). Be sure to indicate your home address in your country of residence on this form. Provide an address where you can receive mail after the New Year. Your Form W-2 will be mailed to this address.
When your employment ends, make sure the employer has your permanent home address in your country.
You will need a Form W-2 for your tax refund. U.S. law requires that all employers send their employees W-2 forms by February 15. One copy of the W-2 form is sent to the U.S. tax authorities. To make sure your W-2 form is not lost in transit, you can ask for a copy to be emailed to you. To reach more information, dive deep into this page now.
Why might it be advantageous to write "zero"?
Your employer will withhold the maximum amount of taxes from each paycheck. That way you'll be grossly overpaid in taxes and probably get a huge refund the following year. However, in that case, it's like you're lending money to the government, and it could be invested.
Why is it advantageous to write non-zero?
If you specify as many allowances as possible, you can get more money in your pocket every month. But you have to be careful not to make a mistake here, or you'll have to pay the IRS extra at the end of the year.
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