This topic has explained how to use Forms W-4 and W-4P, which allow taxpayers to adjust their tax withholding allowances.
An employer withholds tax based on wages paid and information the employee provides on Form W-4, Employee's Withholding Allowance Certificate. A payer of a pension, annuity, IRA stock bonus plan, or certain deferred compensation plan withholds tax based on the information the taxpayer provides on Form W-4P, Withholding Certificate for Pension or Annuity Payments.
Taxpayers who do not have enough federal income tax withheld can be subject to interest and penalties. Taxpayers who want to avoid owing taxes at the end of the year are allowed to claim fewer allowances than they are entitled to claim.
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