How to Change Tax Exemptions

Every time you receive a paycheck, the United States federal government requires your employer to withhold income tax. The amount that is deducted depends on two things: the amount earned in each payroll period and the information concerning tax exemptions that you gave on Form W-4. You have the legal right to change these exemptions at any time.

There are several reasons to change the number of exemptions on your W-4. Your marital status may have changed, there may have a birth or adoption of a child or death of a dependent. There may also be financial reasons to change your exemptions. It is not recommended to use your withholding as a saving account. If you are getting a tax refund over $500.00 or if you owe the IRS more than 10% when income taxes are due, you
should considered changing your martial status or the amount of exemptions you claim on your W-4.

To make changes, ask your employer for a new W-4 or go online to the IRS.gov website and download the form. The form will come with worksheets to help you make the right choices. You can also download a tax calculator.

The W-4 form contains information that your payroll department will use to decide the amount of withholding tax that will be taken from your paycheck. The W-4 will let them know whether to use the single rate or the lower married rate. It tells them how many withholding allowances you claim. You can also have an additional amount withheld. If you are claiming an exemption from withholding in 2011, this is also noted.

The new and corrected W-4 is given to your employer or company payroll department. You do not file it with the IRS. The change usually goes into effect within thirty days or by your next paycheck.