For the new (hopefully employed) grads

Taxes and Your First Job

Out of school and into the workforce. If that description fits you or a family member this summer, filling out Form W-4 properly can make your first job less taxing.

Here’s why: The amount of federal income tax withheld from your wages depends on how you complete IRS Form W-4, the “Employee’s Withholding Allowance Certificate,” which tells your employer your marital status and the number of withholding allowances you’re claiming.

Withholding allowances are similar to the number of dependents you have. Claiming more allowances generally reduces the income tax deducted from your paycheck, but you can only claim the number you’re entitled to.

Think too much tax will be withheld? As long as you expect to work no more than 245 days for all employers during 2011, you might want to consider making a written request to have your federal withholding calculated using an alternative method. The “part-year employment method” of withholding can boost your net pay. Just be sure to complete a new Form W-4 next January.

Caution: Estimate your annual income carefully. Form W-4 affects only the amount of tax withheld, not the total tax that will be due with the tax return you’ll file at the end of the year.

You may also be entitled to tax breaks such as above-the-line deductions for moving expenses and student loan interest. Please contact our office if you need additional information or assistance.

This entry was posted in Income taxes and tagged , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s