Question

Bob is married, and his spouse is employed part-time making less than $1,000 per year. They have three dependents. Bob just started a new job and needs to complete his W-4. Using this information, answer the question below.

Explain the types of withholding allowances Bob may claim for income tax purposes and the purpose of the W-4 form.

Under what conditions would Bob be exempt from withholding of federal income taxes in 2016?

How would Bob indicate a no-tax-liability status if he qualifies for exemption?

Answer 1

A withholding allowance is a number that your employer uses to determine how much federal and state income tax to withhold from your paycheck.The moreallowances you claim on your Form W-4, the less income tax will be withheld from each paycheck.

The money Bob makes from company XYZ goes to support not only himself, but also his two young children. Jack may therefore claim two exceptions: one for himself(only if if no one else claims you as a dependent), and one for each of his children( if no one else claims them as a dependent).

If an employee qualifies, he or she can also use Form W-4.pdf to tell you not to deduct any federal income tax from his or her wages. To qualify for this exempt status, the employee must have had no tax liability for the previous year and must expect to have no tax liability for the current year. However, if the employee can be claimed as a dependent on a parent's or another person's tax return, additional limitations may apply;