The Paperwork

There’s some pretty complicated paperwork to get your withholding right.

The information you enter about your income, tax filing status, and exemptions on IRS Form W-4 determines how much your employer withholds to prepay federal income taxes. You earn no interest on the surplus if too much is withheld, and could owe a penalty if the amount is too little. So it’s in your best interest to get the W-4 right. If you’d like some help, check out the IRS simulation at http://www.irs.gov/app/understandingTaxes/hows/mod01/sim_mod01_04.jsp Links to an external site..

There are also enrollment and contribution forms for other benefits, like retirement plans and flexible spending accounts. And it pays to fill them out carefully. You can usually modify the choices you make at a later date, but you may have to live with those decisions for a calendar year.

Don’t hesitate to ask your parents, your company’s HR department, or your benefits administrators for help. They have all dealt with these forms before.

 

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