The new W-4 form explained
The importance of correctly filling out US tax forms can often be disregarded as the process can be, let’s face it, quite boring!
However, the importance of these forms cannot be underestimated, as it is absolutely crucial for any nonresident to abide by the strict tax laws in The States.
In fact, the way that you handle your US tax affairs can play a big part in whether your future visa or Green Card applications succeed or not.
In this blog we’ll lay out some of the key information you need to know before filling out the W-4 form, so that the correct amount of tax is withheld from your paychecks.
What is Form W 4 used for?
Form W-4, Employee’s Withholding Allowance Certificate, is an Internal Revenue Service (IRS) tax form that is filled out by employees in order for their employer to get a better understanding of their tax affairs. You can find the form here – W-4 (2020).
You will see seven lines on the form, and all seven must be filled out before sending it off.
As someone who is working in the US as a nonresident, you’re going to have a new W-4 to fill out, and essentially we are here to break it down for you in simple terms.
Why is it so important to fill out W-4 for properly?
It is hugely important as if it is not done correctly, you may end up not paying enough taxes and will be struck with a large balancing payment at the end of the year.
On the form itself, you will be asked to fill out some personal details including your name, US address, TIN (Tax Identification Number), and marital status.
While there are a set of instructions on the form itself, they are tricky to understand for some nonresidents.
The good news is, the new W-4 is relatively easier to fill out in comparison to the older version, with more straightforward information required for you to fill out.
You will need to fill out the form specifically based on your own personal circumstances.
Step 1
You should complete Step 1 in full. On line (c), check only “single or married filing separately” marital status, regardless of your marital status.
Step 4
In the blank space under Step 4 (c) enter “NRA”.
Step 5
For Step 5, fill out dates, employer’s details and sign in the relevant spaces and leave the rest of the form blank.
Always be sure to double-check the form to make sure all the information you have filled in is correct.
Other important information about the W-4 form
Due to a special tax treaty between the Indian and US governments, if you are an Indian resident then you are entitled to some additional deductions and credits that are not available to pretty much any other country.
Canada, Mexico and South Korean citizens cannot claim the same standard deductions as India apprentices, but they can still claim child tax credit or credit for other dependents. If they do not apply for those, the form is the same as for all other nonresidents.
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