A pay period is a recurring length of time over which employee time is recorded and paid. Examples of pay periods are: weekly, bi-weekly, semi-monthly, and monthly.
- A weekly pay period results in 52 paychecks in a year
- A bi-weekly (every other week) pay period results in 26 paychecks in a year
- A semi-monthly (twice a month) pay period results in 24 paychecks in a year
- And a monthly pay period results in 12 paychecks in a year.
The number of paychecks in a year is an important distinction in calculating total gross pay for a year.
Marital status affects your taxes. Married people pay lower taxes than Single.
Similar to the federal taxes withheld, each state also withhelds some of your paycheck's taxes. State income taxes vary greatly among different states.
Allowances on the W-4 are designed to reduce your income by the amount of non-taxable income calculated on your tax return.
How many W-4 allowances should I claim?
- You can claim one allowance for yourself, unless someone else (a spouse or parent) will list you as a "dependent" on his or her income tax return.
- You can claim an allowance for your spouse, unless he or she is working and has already claimed an allowance for himself or herself at work.
- You can claim one allowance for each child you list as a dependent on your tax return, unless your spouse has already claimed the child on his or her W-4 form.
Each individual in the family can be claimed only one time by one person to gain a withholding allowance. Here are some other allowances you might claim:
- You can claim an allowance if you're single and have only one job.
- You can claim an allowance if you're married, have only one job, and your spouse doesn't work, or wages from a second job or spouse's job are $1,000 or less.
- If you're filing as "head of household," you can claim an allowance. To be a "head of household," you have to be single and must be paying more than half the cost of maintaining a home for yourself and your dependent(s).
- You can claim an allowance if you spend at least $1,500 per year in out-of-pocket child care expenses, as long as you intend to claim a credit for this on your income tax return.
You can claim allowances for the Child Care Credit. In 2014, the following conditions apply:
- If you're single and your income is less than $57,000, or if you're married and your income is less than $85,000, then you can claim two (2) additional allowances for each eligible child.
- If you're single and your total income will be between $57,000 and $84,000, or if you're married and your total income will be between $85,000 and $119,000, then you can claim one (1) additional allowance for each eligible child plus one (1) additional allowance if you have 4 or more eligible children.
You can use the W-4 worksheet to calculate additional allowances. These allowances are based on deductions for interest on your home mortgage, contributions you made to charities, state and local taxes, some medical expenses, and various other deductions you might have taken. See the W-4 form for details.
An employee may not earn enough each year to have to pay any income taxes at all. In order to avoid having any taxes withheld, an employee may write the word “Exempt” on Line 7 of the Form W-4.
Assuming that a taxpayer does not itemize deductions on his income tax return, each year a taxpayer may exclude from his taxable income the sum of a standard deduction and all personal exemptions claimed.