The W-4 form contains five steps. Not every step is applicable to every employee, so some sections might correctly remain blank.
Step 1.
Here, clergy and non-clergy would provide personal information. Make sure the name, address, and social security number entered match what Payroll has on file.
This section also asks filing status: single or married filing separately, married filing jointly or qualifying widow(er), or head of household. Be certain only one box has been checked. Knowing someone’s correct filing status is vital because it determines the standard deduction and tax rates used to compute withholding.
Step 2 (non-clergy only)
Only a person with more than one job or a spouse who works (and together filing jointly) completes this section. Following the specific instructions that pertain to one’s circumstance improves the accuracy of withholding.
Step 3 (non-clergy only)
People claiming dependents need to complete this section. It provides instructions for determining the amount of the child tax credit and the credit for other dependents who the employee may be able to claim when he files his federal tax return. Like in step 2, such information increases the accuracy of withholding. (Remember, from the perspective of the IRS, the goal is to come as close as possible to nothing owed and nothing refunded upon completion of the annual federal income tax return.)
Step 4.
This optional section is for non-clergy but is required for clergy if they want to eliminate estimated payments.
An employee who wants an additional amount of tax withheld for other income she expects this current year that won’t have automatic withholding enters the amount of other income in this area’s line A. This total frequently includes interest, dividends, and retirement income.
Step 4 line C is the place for the non-clergy and clergy to request extra withholding from his paycheck.
The formula is as follows:
The total taxable income including housing (box 1 and 14) x 15.3 / by the number of pay periods.
Clergy who complete this line often do so as an alternative to making estimated tax payments on their own. They find it easier to have the amount deducted from their paycheck rather than completing 1040-ES paperwork and making payments themselves. This step is also designed to increase withholdings to cover self-employment tax.
Step 5.
Make sure the employee signs and dates appropriately in this section. You’re responsible for completing the remaining items: the employer’s name and address, the first date of employment, and Employer Identification Number (EIN).
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W-4 Instructions for Clergy