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Help Filling Out a W-4

Your W-4 is an important thing to get right because it ultimately decides how big your tax refund is – or if you owe the IRS money

If you are an employee, you pay income tax through withholding – tax money your employer takes out of your paycheck each pay period.

You can determine how much gets taken out by filling out Form W-4 [Employee’s Withholding Allowance Certificate]. If too much gets taken out, you will receive a refund when you file taxes. If not enough is taken out, you will have to pay the IRS.

You will be asked to fill out a W-4 when you start a new job. But you can also fill out a new W-4 any time if you wish to adjust your withholding. You should especially be sure to do so after major life events such as getting married or the birth of a new child.

How to Fill Out the Form

The first part of the form should be easy enough. It’s just your personal information: name, address, social security number, etc. Continue reading “Help Filling Out a W-4”

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Federal Tax on Military Retirement Pay

Most military retirement pay is treated (and taxed) as normal income, but in certain cases it can be excluded

In the eyes of the federal government military retired pay is no different from any other form of income, which means that you have to pay income tax on it.

Generally payment you receive as a member of the military is taxed as wages. But retirement pay is taxed like a pension. If your retirement pay is based on age or length of service it is taxable and must be included on your tax return on the section for pensions and annuities (this is line 16 on the actual Form 1040 [U.S. Individual Income Tax Return]).

In fact taxes should be withheld from your retired pay before you even get it. How much is withheld depends on how many exemptions you claim on your Form W-4 [Employee’s Withholding Allowance Certificate] after retirement. You can change how much tax is withheld by completing a new W-4. Claiming 0 exemptions means that the maximum amount of tax will be withheld; the more exemptions you claim the less will be withheld.

In January after the end of the tax year you should receive a Form 1099-R [Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.] showing how much retired pay you received and how much tax was withheld. You must report this information on your tax return. Continue reading “Federal Tax on Military Retirement Pay”

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Who Needs to File New York State Taxes?

Figure out if you need to file a New York return and then take care of it on RapidTax

There are three categories of people who have to file a New York State return: residents, nonresidents, and part-year residents. All three categories have different reasons for filing.

Residents

New York residents are pretty much those people who live permanently in New York State. Officially a resident is anyone whose domicile is in New York or whose domicile is not in NY but who maintained a permanent place of abode in NY for more than 11 months of the year and spent at least 184 days here.

Obviously there are exceptions, but they are relatively few and far between. You can find the definition of a resident and the exceptions here.

Generally New York residents must file Form IT-201 Resident Income Tax Return if they were also required to file a federal return. They must pay tax on ALL of their income no matter where it was earned. Continue reading “Who Needs to File New York State Taxes?”