Pay Now or Pay Later: Five Tax Questions You Should Ask Yourself When Starting A New Job

Starting a new job can be just as exciting to adults as the first day of school is to children. It is an opportunity to begin something new and it is also the opportunity to start fresh in your career. But while starting a new job can be super exciting, it can also be super overwhelming, especially when it comes to filing out tax forms.

Most employers require that their employees fill out tax forms prior to starting a job. Doing so not only verifies your identity but also ensures you are legally allowed to work in the country. After completing these forms, your wages will be taxed by your employer in the manner which is proper according to your marital status, earnings and so forth.

As you mull over the complexities of your new job, it is important to remember that obtaining new employment can oftentimes give rise to all sorts of new tax issues. Here are five tax-related questions you should be sure to ask yourself when you begin a new job.

How do allowances affect my paycheck?

If you claim more allowances, you will have less income tax withheld from your pay. Fewer allowances also mean more income tax is withheld from your pay.

How much will one additional allowance change my take-home pay?

One of the most efficient ways to display how an additional allowance will impact your take home pay is by using the form W-4 Withholding

Should I file married but withhold as single?

When you select the “married” box you generally will have less tax withheld. The primary reason for this is because the withholding formula assumes that during tax season you will file jointly with a spouse who doesn’t work.

If your spouse has a high income, you may want to consider checking “married but withhold as single” to ensure a significant amount of taxes is being withheld.

Is it better to have more withheld just to play it safe?

While choosing to have too much tax withheld may feel safe there is nothing safe about allowing the IRS to hold an unnecessary amount of money. If you really want to play it safe simply do your tax form the right way.

Is a withholding allowance the same as a dependency exemption?

Not quite. A withholding allowance is not the exact same thing as a dependency exemption. The size of your withholding allowance is in part based on your dependency exemption.

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