Tax forms can be extremely confusing, so we want to make sure you’re on top of your game when it comes to Federal W4 Tax Forms. Here are some frequently asked questions about the Internal Revenue Service’s (IRS) Federal W4 Tax Form:

Federal Form W4 is used by employers to determine the amount of tax withholding that is necessary to deduct from employee wages. It is filled out by employees when hired. Ideally, the withholding amount should equal the annual tax due on the 1040 series (though this may not always be the case). This form does not include provisions for part-time employment.

In the Federal Form W4, employees calculate the number of allowances he or she will claim (based on their tax filing situation). For each W4 form allowance that is taken, the amount of money withheld as income is reduced. This decreases any tax refund he or she may be eligible for or raise liability for taxes due. Penalties are enforced for under-withholding (beyond a certain level) and there is no interest paid on over-holding. The IRS withholding calculator can calculate withholding allowances (see link below).

In addition, in the event too little tax is being withheld, line 6 on the Federal W4 form allows employees to withhold a stated amount (per period). Employee may also send quarterly estimated tax payments directly to the IRS with form 1040-ES. On line 7, those seeking exemption from all withholding will most likely hear from the IRS regarding further information. A person who annually earns less than his or her “Personal Exemption” and “Standard Deduction” is not subject to having taxes withheld.

A note of confusion is when the number of withholding allowances does not equal the number of Form 1040 exemptions. Although the form exemptions are otherwise alike, one additional W4 allowance is possible for having only one employer. If someone has more than one employer, he or she may either retain the one that provides the highest compensation or forfeit this allowance with both employers.