As a young person, I can attest that obtaining summer employment is truly an introduction to adulthood. As reported by the Bureau of Labor Statistic under the U.S. Department of Labor, the number of employed youth 16 to 24 years old increases from spring to summer and went from 1.9 million in April 2016 to 20.5 million in June 2016. When youth are employed, they are required to fill W-4. However, many of these youth lack understanding about how to complete a W-4 and its importance. Although a person who makes less than $6,300 is not required to file a tax return, there may be an opportunity to receive a tax refund after tax season.
According to Paul Harrison, Director, Tax Clinic, Center for Economic Progress, “Form W-4 is the form that new hires fill out when they start work to tell their employer how much money to withhold from the employee’s pay for federal income tax. Its advantage is that it enables the taxpayer to tell the employer to withhold less money for income tax or even no money for income tax. If the taxpayer does not fill out Form W-4, then the employer would be required to withhold the maximum amount for federal income tax.” Employers give W-4 forms to new employees to determine how much federal income is withheld. The W-4 includes a personal allowance worksheet that helps an employeet calculate the allowances the employee should claim. The more allowances the employee has, the less federal income is withheld. Be though careful because not accurately calculating your personal allowance can cause the YOU to owe money to the federal government. You can keep your personal allowance worksheet for your records.
The next section of a W-4 is the Employee’s Withholding Allowance Certificate. This is where the employee should fill basic information (name, address, social security number, etc.) in for the first four questions. On question 5, enter the total number of allowances that you, the employee, claim. Questions 6 - 7 allow for the employer to withhold more money. Many youth employees write zero for these questions. Lastly, place youre signature and date at the bottom of the form. Typically, employed youth can ignore the Deduction and Adjustment Worksheet unless they are married and/or have children. Youth that have more than one job would need to fill the Two-Earners/Multiple Jobs Worksheet.
Does all this make you nervous? Paul Harrison says, “Relax. If you’re uncertain about anything, claim 0 deductions and exemptions. Doing so will make you subject to maximum withholding, and any excess will be refunded once you’ve filed your tax return.” Similarly, Anabel Hernadez, Sophomore at UIC explained, “I’ve had to fill out a W-4 every year since I’ve been employed every summer. The biggest challenge is keeping everything accurate and making sure that I put down the correct information for each answer.” Anabel suggests having someone who has completed the form before help you – your employer should be able to help you as well.