JANUARY 15TH, 2010
By CPA SAM
Q. My payroll person told me that the filing status on the W-4 doesn’t necessarily mean the same thing as my marital status. Is that true? What is filing status?
A. Filing status on the W-4 and filing status on your tax return are not necessarily the same thing. The W-4 drives withholding only. The withholding formulas issued by the IRS come in only two flavors, married and single. Any other situation is handled by the number of allowances claimed. Other situations include head of household, children and multiple jobs. In certain situations, if married folks claim married on their W-4s, they will not have enough withholding. By switching over to the single withholding formula, additional withholding takes place. Some companies use the W-4 to determine the marital status of their employees. This is not a good policy. In fact, if an employer receives a lock-in letter for a specific employee, he/she may be directed to withhold at Single with zero allowances regardless of the marital status of the employee.
On your tax return, the rules are different. You are only allowed to claim married if you are in fact married. If you are married, you cannot claim single. There is a special status called married filing separately for those who wish to use it. Certain situations may warrant this for better tax treatment. The key here is that your marital status on the last day of the tax year determines your status for the tax return for that year.
I hope this helps.
JANUARY 28TH, 2009
By CPA SAM
Q. My divorce was finalized mid November…I do not work….how should my ex-husband and I file? We still live in the same house, although me and the kids upstairs, he downstairs…In our divorce decree, he gets to claim both kids as exemptions through 2010. As stated in the decree, he also must pay me temporary spousal support through Nov 2011. Does this payment have to be claimed as a type of alimony paid or received …or does the fact that we still reside together in the same home exempt us from having to claim it either way? I guess the main question is how do we file for this year? How will I file beyond 2008, being as though I won’t work, but will receive child support/temp. spousal support, all the while living in the same home?
A. Oh what a tangled web we weave…(Sir Walter Scott)
Your case is a complicated one and you definitely need to find a competent tax professional in your area to go over the details of your case to prepare an accurate tax return. In the eyes of the IRS, if you are not married on December 31st, you were not married at all for the year. You would file either single or Head of Household although I believe you are not eligible for the latter. Following is the definition of Read more »
JULY 16TH, 2008
By CPA SAM
Q. My employer says I have to complete a new W-4 every year. Is this true? How often do I have to do this? It’s always the same.
A. I’m amazed at how many questions come in regarding the Form W-4. This deceivingly simple Read more »
MAY 28TH, 2008
By CPA SAM
Q. My paycheck is never the same because I’m in sales. I’m always adjusting my W-4 to get the withholding right. Now my payroll department is telling me I have to wait a month before my changes are input. Is this legal?
A. As I say all the time in this blog, the W-4 is the employee’s best tax planning tool. If you get the right amount of withholding set, you will have neither a large refund or a large extra payment when you file your taxes. Unfortunately, that is the ideal situation that most people never see.
Per IRS Publication 15, “If an employee gives you a Form W-4 that Read more »
MAY 16TH, 2008
By CPA SAM
Q. I had way too much withholding last year and got a huge refund when filing my tax return. How do I change that?
A. This blog is coming from the floor of the Exhibit Hall at the American Payroll Association 2008 Congress in Austin, TX. With almost 2000 payroll folks surrounding me, I get to see the other side of your question as well. Payroll folks sometimes can’t understand why the regular employees don’t Read more »
Q. What does the box mean on the W-4 Form that says “Married but withhold at higher single rate?”
A. This is one of the most frequent questions I get. The answer lies in an understanding of federal withholding. There are two withholding tables used by employers to withholding federal tax. One is for those who check the box “Single” in the W-4. The second table is related to those who check the box for “Married” on the W-4. There are also two income tax tables: Married and Single. The selection you make on the Form W-4 tells Read more »
APRIL 24TH, 2008
By CPA SAM
Q. How do I complete the Form W-4 if my spouse is working or out of the country or retired?
A. Keep in mind that what I can discuss here is very general due to the nature of the question. The Form W-4 as mentioned before is the road map your payroll department uses to calculate your withholding correctly. A good rule of thumb is that if you claim an allowance on the W-4, your spouse cannot claim that same allowance. For instance, if you are married and put a “1″ in box A, then your spouse cannot Read more »
