The W4 form determines federal tax withholding. Image: Flickr / Ewan-M / CC-BY-SA
Now that it is 2011, the federal government has issued a new set of tax forms. The 2011 W-4 form has been issued and does not include major changes. The government does recommend that you review the 2011 W-4, but filling out a new one is not required.
The changes on the 2011 W-4 form
The 2011 W-4 form is the Employee Withholding Allowance form. It tells the government and the employer how much money should be held out of each paycheck for taxes. The 2011 W-4 form includes small changes to the worksheet that help employees determine exactly what should be withheld. This includes the adjustments for the payroll tax holiday.
The details of the payroll tax holiday
The 2011 W-4 form includes adjusted tables for the reduction in 2011 payroll taxes. The tax reduction takes the standard payroll tax that goes to Social Security from 6.2 percent to 4.2 percent. This 2 percent reduction in payroll taxes amounts to a small raise for most Americans that will show up in each paycheck. For most workers, that will add up to between $10 and $40 extra on each paycheck. This was passed as a part of the deal that extended unemployment benefits and tax cuts for the next two years.
Is the new 2011 W-4 form required?
There has been a rumor that the 2011 W-4 form is required because of new taxes for 2011. The federal government only recommends that each employee review and make adjustments in the W-4 form because the tax structure is changing. The W-4 form is required for any new employee, but old W-4 forms are valid as long as they have been filled out properly. Employers will also be required to report the value of health insurance benefits on their tax forms for employees, but this value does not figure as income. It is informational only to address the cost of the new health insurance bill.
