Just Married? Correct Your Tax Form
By Davis Clarkson , August 28 2020
Tax evasion is a big problem in the United States — roughly one in six dollars owed to the government in federal taxes aren’t paid. No one wants an IRS visit, so it’s important to stay on top of any changes that occur towards your income. Tax withholding is one area that trips a lot of people up because you need to change your W-4 for a lot of different reasons.
For example, do you need to update your W-4 form if you get married? How does this ceremony affect your income? In this article, we will go over what a W-4 form is and cover some of the different reasons you might need to update it.
What Is A W-4 Form?
A W-4 form is something the IRS uses to determine how much money your employer will set aside from your paycheck for federal taxes. People know the process as withholding. Every year people must pay a tax based on their income. If you withhold money throughout the year, then avoid paying a lot in interest and penalties when tax season rolls around.
You can easily withhold too little or too much from your regular income if you don’t pay close attention to your W-4 form. As such, you must be alert to the amount of allowances you’re given. Allowances are things you declare that reduce the amount of money your employer withholds from you with each payday.
These include things like having a spouse and multiple dependents in your household. There are some scenarios where you may want to voluntarily withhold more money from your paycheck. For example, if you have two jobs or a spouse who works another job, then it may benefit to withhold a little extra money each week.
This process will save you from withholding penalties and decrease the final income tax sum that you pay in April. If you have any questions about the W-4 form, then make sure to check out some IRS FAQs.
Must I Update My Tax Withholding After I Get Hitched?
Yes, you must update your W-4 form if you get married. Being married requires a new form because with potentially two sources of income merged, you and your spouse may rise to a new tax bracket. Ideally, you will file taxes jointly. This process qualifies you for a lower tax rate and fewer deductions. It also lets you claim more allowances which reduce the amount withheld each month.
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However, there are some scenarios where you may want to file taxes separately from your spouse. For example, if your spouse doesn’t have a job, then the amount of withholding will decrease. It’s easy to over or under-withhold from married couples if the W-4 form isn’t properly filled out as soon as possible.
Are There Other Scenarios Where I Should Update my W-4?
Getting married isn’t the only thing that can change the amount of money withheld from your income. You should update your W-4 after any of the following major life events take place.
1. You Get Divorced
Unfortunately, if you get divorced, then you’re back to a single status which undoes some tax benefit and alters your income. As such, you will need to fill out a W-4 form. Unfortunately, alimony payments are no longer tax deductible if you’re paying. Things work out if you’re the recipient though — you don’t need to declare alimony as a source of income.
2. You Have Or Adopt A Baby
A new baby increases the number of dependents on your tax form. This event provides you with a tax credit. If you adopt, then it also lessens the overall tax burden. Either circumstance can affect the amount of money withheld from you with each paycheck. As such, it’s important to re-do your tax return so you can get some compensation for the financial burdens of raising a child.
3. You Lose Your Job
Sorry if you lost one of your jobs — but it’s time to get back on your feet and fill out a W-4 form. If you have another primary job, then you can reduce the amount of withholdings in that place of business. You also get allowances that you may have been exempt from with two jobs. If you lost your main job and you're married, then you should advise your spouse to change their W-4.
4. You Take On A Second Job
If you land a sweet second job, then congrats! Your income just went up, which likely puts you in a different tax bracket. Updating your W-4 after you get a new job is important because you must split your allowances between the two jobs. Alternatively, if it is a side job or freelance work, then you can adjust the W-4 at your main place of employment to explain the increase in your income.
If your spouse takes on a second job, then they should re-do their W-4 as well — especially if you file jointly.
5. You Buy A New House
If you purchase property, then it will affect the amount withheld from your income. Most of the time it benefits to update your W-4 with this information as it gets you a big tax benefit at the end of the year.
Pay Stubs Help Remind You Of Your W-4 Withholdings
What is a pay stub? A pay stub is essentially your proof of income. It’s a document that shows the amount of money your job pays you on a weekly or biweekly basis. Pay stubs are important because they show your income after deductions like insurance, taxes, and other employee benefits. A pay stub will also include the amount of paid time off (PTO) that your company offers you.
Pay stubs are important for W-4 forms because they show the amount of federal withholdings you claim. Remember, the amount of tax withholding you claim determines the amount of taxes your employer holds back. If you don’t have a pay stub, fear not! You can create one easily by following this link right here.