Employee’s Withholding Allowance Certificate

An employee’s withholding allowance certificate is also known as a W-4. The primary aim of withholding is to ensure that the employee pays sufficient taxes throughout the year to cover a large portion of taxes due on December 31. The W-4 relies on an allowance system that calculates the exact amount of taxes to withhold.

The more allowances reported on the W-4 means less tax would be withheld. To avoid under-withholding, allowances must only be claimed for items that will be reported on the tax return. The W-4 permits one allowance for personal immunity and another for each subject expected to be claimed on the tax return.

Increasing allowances is permitted for various reasons, including:

  • Working a single job

  • Working as a sole provider if you are married.

If filing as head of household, reporting additional allowance is also permitted.

The Internal Revenue Service requires a W-4 form for every employee hired.

The W-4 form provides the exemption and withholding status for each employee, helping the employer withhold accurate federal income tax amounts when the employer processes payroll.

Before submission, ensure that the W-4 is filled out completely and signed.

Additional allowances are obtainable for additional tax credits reporting itemized deductions.

Each allowance signifies a reduction measure to probable income that is taxed per year.

Form W-4 tells businesses how many allowances employees want to claim.

It allows employees a degree of control over how much of their income they want withheld based on the allowances they claim.

These allowances adjust the portion of employee income that is subject to federal income tax for any business entity.

Employees will asked to fill out a Form W-4 when they first start a job.

Employees also can submit a new Form W-4 at any time during the course of their employment if they want to change their withholding allowances.

Calculations that configure the withholding reflects the reductions.

Getting a tax refund when claiming too few allowances because more tax was withheld during the year than actually owed.

Claiming too many allowances on W-4, will cause you to owe more tax when tax season arrives.

Withholding Exemptions

Employee’s withholding allowance certificate allows staff to distinguish how much federal income tax to withhold from their new employee's wages.

The significance of having each employee file a Form W-4 cannot be overstated, so completion is the precedence.

If a person does not file, the tax should be withheld with a no-exemption designation. For married employees, an employer needs to treat the worker as a single employee, according to the appropriate withholding tables.

Additionally, rates on withholding single employees is larger than married ones since the number of withheld tax from the payment wage lowers as exemption claims go up.

A copy of Form W-4 must be sent to a state agency as part of the essential information about new hires.


Employer use employee-requested immunities to determine the amount a worker’s pay to take from a pay check for the purpose of tax collection. Fewer allowances mean more income tax withheld from a paycheck, while additional allowances translate to less income tax taken from the pay check. U.S. taxpayer usually use W-4 to determine the necessary withholding amount.

Note: Excessive withholding could result in underpayment of taxes, which could result in penalties after you file a return.

Request to your employer to withhold an additional amount if your allowance claim is zero, or if there is not enough withheld from your pay check.

More withheld than should be will receive a refund after filling the annual return.

With that, a refund is not always a good because it could have been money used to invest or pay expenses.

Be aware that does not pay interest for any balance where excessive amounts are withheld.


The IRS issues a specific formula in regards to the number of allowances a person can claim to achieve the right withholding figure. Concerning financial situations, recalculation of withholding allowance is permitted and submits a new form W-4 to the employer. Not submitting the form W-4 to the employer displaying the number of allowances want to claim, the employer will figure that the number amounts to zero, and getting the limit of tax withheld from every paycheck.

If you need more information on an employee withholding allowance certificate, you can post your legal need on the UpCounsel marketplace. UpCounsel’s legal team is here to help you all areas pertaining to taxation and withholding on behalf of employees. You do not have to traverse uncertain unwaters if you are unsure about any issue related to taxes.