It is important to regularly review your W-4 Withholding Allowance Certificate, especially as a new year begins, to assure proper payroll tax withholding for the year.
The declared W-4 allowances determine the amount of taxes to be withheld from payroll payments.
If tax withholding amounts are too high, employees are in effect making an interest-free loan to the U.S. government and will be losing out on use of those funds during the year until tax return refunds claims are filed. On the other hand, if not enough is being withheld the employee may be subject to a penalty when filing her or his personal income tax return. Generally, a penalty will apply if a taxpayer’s withholding and estimated tax payments total less than 90% of that year’s tax liability as calculated on the income tax return and less than 100% of the previous year’s tax liability.
Reasons to Consider Changes to W-4 Withholding Allowances
There are many lifestyle, work, and family-related reasons for employees to change withholding from one year to the next. Here are some, but not all, of the possibilities:
• Change in marital status
• Retirement or imminent retirement
• Birth or adoption of a child, or a child no longer eligible to be claimed as dependent
• Changes in jobs or compensation levels for either spouse
• Purchase, sale, or refinance of a home
• Changes in income not subject to withholding such as independent contractor payments, dividends, interest or rental income, or capital gains
How Can You Determine Optimal W-4 Withholding?
1. The Internal Revenue Service provides a recommended withholding calculator at https://www.irs.gov/individuals/irs-withholding-calculator
How Do I Check or Make Changes to My W-4 Withholding Certificate?
Changes to W-4 withholding can be made using the self-service tools within the University payroll system, as follows:
• Use your NetID and password to log in to myBYU from the BYU homepage
• Select Work under Campus Links
• Select Human Resources/Payroll, then Main Menu and Self Service
• Select Payroll and Compensation, then W-4 Tax Information
• Review current claimed withholdings and make changes if necessary then submit
Although the Payroll Office does not provide tax advice, you may call the Payroll Office if you have questions about the W-4 process.