- 1). Check your W-4 form to see the number of personal allowances you claimed when you completed the form. Your employer is required to have each employee complete this form after starting the job. You are allowed to see it and, if you want, to change it at any time to increase or decrease your allowances claimed. If you claimed zero allowances, skip to Step 5.
- 2). Consult the most recent version of IRS Publication 15 to determine the value of your personal allowances based on your pay period. The value of the allowances changes each year with inflation. For example, if you are paid monthly, each allowance is worth $304.17 for 2010. This figure reduces the amount of your pay that is subject to federal income tax.
- 3). Multiply the number of allowances claimed on your W-4 form by the figure from Step 2. Continuing the example, if you claimed three allowances, you would multiply $304.17 by three to get $912.51.
- 4). Reduce your paycheck amount by the value of your personal allowances to determine how much of your pay is subject to federal income tax withholding. For this example, if your monthly paycheck was $6,500, you would subtract $912.51 from $6,500 to get $5,587.49.
- 5). Use the federal income tax withholding table for your pay period and filing status in Publication 15 (the tables start on Page 39 in the 2010 version of Publication 15) to calculate your federal income tax withholding. Finishing this example, if you use the monthly income tax withholding table for singles, you will find that $1,002.62 is being withheld for your federal income taxes.
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