Tax Software Reviews and Tools for the 2019 - 2020 Tax Season

Withholding Calculator

Use this calculator if you are an employee and would like to determine whether you need to give your employer a new Form W-4, Employee Withholding Allowance Certificate to insure you are not having too much or too little federal income tax withheld from your paychecks. Use your withholding calculator results to help fill out the new W-4 form for your employer.

Your Employer is responsible for making sure you are paying taxes from the income you earn. However, you can make adjustments to this amount by changing the number of allowances you claim.

Personal Withholding Exemptions - Form W-4

The amount of wages subject to graduated withholding may be reduced by the personal exemption amount. Personal exemptions must be claimed on Form W-4, Employee's Withholding Allowance Certificate.

Adjusting Employee Paycheck Withholding

Making exemption adjustments will enable you to increase or decrease your calculated withholding amount which in turn will increase or decrease your year end tax refund. The goal should be to end up near even with Uncle Sam at year end.

The last thing you need to do is give Uncle Sam an interest free loan, so making sure your not having too much money withheld from your paychecks is important in this manner.

However, some taxpayers use this overpayment method of having too much taxes withheld as a sort of savings program. If you can seem to save money, this is a way to keep the extra cash out of your hands throughout the year so that you have a much bigger tax refund come year end.

I'm no rocket scientist, but is you can control your spending, it's better to keep the money yourself and earn interest on it...

Employee Tips And Withholding Requirements

Employees earning monthly cash tips in excess of $20 are required to report these earnings thru written reports to their employer by the tenth of each month. All employee non-tip wages are subject to social security tax, Medicare tax and federal income tax withholding.

With non-tip fees or service charges that are collected, it must be determined who receives what portion of these funds because these amounts aren't considered tips. There are either considered income for the employer, or wages for the employee. Common service charge examples include:

  • Bottle service charge (restaurant, night-club)

  • Contracted luggage assistance charges (hotel, taxi)

  • Large party charge (restaurant, conference)

  • Room service charge (hotel, resort)

  • Mandated delivery charge (pizza, retail deliveries)

How To Keep A Record Of Employee Tips

Employees are able to use Form 4070A, (Employee's Daily Record of Tips), to keep a daily record of their tips, and Form 4070 to report their tips to their employer. These forms are available in Publication 1244.

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