For 2024, at what rate must federal income tax be withheld for anemployee who has not properly completed a W-4?
a. married filing jointly
b. married filing jointly with nothing in Step 2
c. single or married filing separately with no adjustments
d. single with one allowance
The correct answer and explanation is:
The correct answer is c. single or married filing separately with no adjustments.
Explanation:
For 2024, the IRS requires that employers withhold federal income tax based on the information provided by an employee on their Form W-4. If an employee has not properly completed their W-4, the IRS mandates that employers default to a withholding rate based on certain assumptions.
The key assumption is that if an employee fails to fill out the W-4 form correctly, the employer will withhold tax as if the employee is single or married filing separately with no adjustments. This is essentially the highest withholding rate to ensure the employee is not under-withheld.
This default withholding method assumes that the employee is claiming no exemptions or adjustments, and it is designed to avoid the risk of underpaying taxes. The withholding rate for a “single” or “married filing separately” status tends to be higher than for “married filing jointly” because the tax brackets are structured to provide more favorable rates for those who are married and file jointly.
For employees who do not fill out Step 2 of the W-4, which allows for additional withholding adjustments based on other income or deductions, the employer uses the “single” rate as a precaution. This prevents under-withholding, ensuring that enough federal tax is collected throughout the year.
It is important for employees to complete the W-4 form accurately to reflect their proper filing status and any additional adjustments, as this can directly affect the amount of tax withheld from each paycheck. If an employee does not complete the W-4, they may end up overpaying or underpaying taxes, which can lead to a refund or tax due when filing their annual return.