<u>Decreasing W-4 allowances will decrease the net pay in your paycheck and not change the total tax burden.
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Further Explanation:
The purpose of W-4 form:
The employee is liable for the payment of the income tax on the earned income. The employer pays from the income tax liability on behalf of the employee. The employer withholds a specific amount from the paycheck of the employee and pays the income tax on behalf of the employee.
The employee files W-4 form for the calculation of the income tax liability and tax withheld by the employee. The employee seizes the income tax liability from the salary of the employee and pays it to the federal government.
Decrease in W-4 allowances:
The W-4 allowance is a benefit given to the employee. The higher amount of W-4 allowance will lead to the lesser withhold money from the paycheck of the employee and vice-versa.
The decrease in the W-4 allowance will decrease the net pay of the employee because the decrease in W-4 allowance will increase the withhold money from the paycheck of the employee. There will be no effect on the tax liability of the employee because the tax liability is calculated on the income of the employee. The increase or decrease in the W-4 allowance will not affect the tax liability.
Thus, decreasing W-4 allowances will decrease the net pay in your paycheck and not change the total tax burden.
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Answer details:
Grade: Senior School
Subject: Taxation
Chapter: Income Tax
Keywords: Decreasing, W-4, allowances, net pay, paycheck, total, tax, burden, withhold, tax liability.
