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Withholding Allowance
(redirected from Withholding Allowances)

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Withholding Allowance
A declaration on a W-4 form stating that an employee should have less money withheld from his/her paycheck. That is, the more withholding allowances an individual declares, the less money is withheld because it is likely that the individual will owe less in income tax. One may declare one withholding allowance each for oneself, one's spouse, and each of one's children and other dependents.


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Next, the withholding allowances of $14,600 (4 x $3,650) are subtracted from the $98,400 annual wage to arrive at $83,800, the amount of wages subject to tax.
Form W-4 includes three types of information that the employer will use to figure an employee's withholding: * Whether to withhold at the single rate or the married rate; * How many withholding allowances the employee claims (each allowance reduces the amount withheld); and * Whether the employee wants an additional amount withheld.
Usually the amount of money you must withhold will depend on the number of withholding allowances claimed by the employee, their marital status and any exemption from withholding taxes that the employee might claim.
 
 
 
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