What happens if I claim 2 on my taxes on the W-4 form on my job application when I don’t have anybody to claim ?

Here are some basic things to understand about income tax. First, the government wants its income tax to arrive throughout the year, not just in a lump sum on April 15, when income tax returns are due. Second, the basic mechanism for ensuring continuous tax receipts is called withholding, which places the burden on employers to collect taxes from each paycheck and remit them to the federal and state governments. In other words, every employer is essentially a tax collector. (There is another mechanism called estimated tax payments, where the taxpayer pays the government directly each quarter.) Third, the total amount withheld is not the amount of tax due, but just credit towards the amount due. The actual amount of tax due depends on your income tax return, and you compare that amount against your withholding. If you need to pay more than the amount withheld, you submit a check with your tax return on April 15. If you withheld more than the tax due, then the government sends you a check with a refund. Finally, the government wants your withholding to be a close approximation of the actual amount of tax due. Generally, the standard is 90% of the tax due. If you don’t tell your employer to withhold enough, then you will pay a penalty for under-withholding, which is based on some interest rate times the amount of under-withholding, generally calculated as (90% * tax due minus withholding). Now people would say that it is hard to predict what their tax will be for the year, so the federal government has another way called the safe harbor rule to evaluate whether your withholding is reasonable. Under the safe harbor rule, you need to withhold at least 100% of your previous year’s tax amount in order to avoid penalties.

You can imagine that everyone has a different tax rate, so how does the employer know how much to withhold? The answer is the W-4 form (and the equivalent form for state withholding), which the employer uses to calculate the amount of withholding for your particular paycheck.

To answer your question, only the employer sees the W-4 form. The government neither sees the W-4 form nor cares what you submitted. The only thing the government cares about is whether your withholdings for the year are reasonably close to your tax due, and if they are too low, then you simply pay a penalty for under-withholding. Also, you can easily compensate for insufficient withholding by making quarterly estimated tax payments. Or you can revise your W-4 form at any time during the year, and your employer will recalculate the amount of withholding from subsequent paychecks.

I’m guessing that you are new to this, and that you probably did not have any income tax for last year (2018). In that case, you don’t need to worry, since under the safe harbor rule, you won’t pay any penalties, regardless of how little you have withheld this year. You could even submit your W-4 form to request that nothing is withheld. The only consequence is that by having less withheld during the year, you will just have to pay a larger differential (or have less of a refund) when you submit your income tax return in April of next year.

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