Started a job! And, staring at those unknowable first-day forms…

Yup, those forms (nearly all related to taxes!) are your first step into growing up and figuring out how much of your hard earned wages to fork over. NOTHING to be intimidated by if we strip it down to basics. Note: we get you probably aren’t doing your own taxes right now - thanks parents! - but you should at least mentally follow what’s going on for the day when A) you start doing it yourself and B) you hire an accountant and need to understand WTH s/he’s saying.

When I get my paycheck, the amount looks depressingly less than I expected...

Because, taxes. The government takes a % of your earnings to pay for things that keep the country humming (police, roads, etc). The % taken from you (“withheld”, “deducted” are the main vocab used) depends on how much you make - the more you make, the more tax you pay.

So what are those first-day forms?

The main ones are to determine how much tax you pay:

I-9
A form to prove you’re eligible to work in the US (so they know you’re going to pay taxes). You’ll enter your social and mainly personal info.

W-4
A W-4 tells your employer how much to auto-deduct (“withhold”) from your paycheck for taxes. It asks you to check off a list of “allowances” (allowances = reasons the government should allow you to keep more money), mainly if you have kids (dependents) or if you’re married. The more allowances you check off (aka “claim”), the more of your paycheck you get to KEEP.

Bursting your bubble: claiming a ton of allowances is NOT a way to pay less taxes. The IRS wants you to use the W-4 to PROPERLY figure out how many allowances you should claim (they even provide a calculator like this to help you). Meaning, they really want you (and you should really want you) to get to the right amount to be taxed. No more and no less than is right…

...WHY should I try to get it right? Because if you claimed 0 allowances (but should have claimed some) then too MUCH tax is withheld from you each paycheck. Sucks to not have that money to use or save each month. (But the gov will send you a refund check at the end of each tax season). On the flip side, if you claimed allowances like it’s candy (but shouldn’t have), then your paycheck will be bigger each month. Fun in the moment, but getting too LITTLE taxes withheld each paycheck means you’ll have a giant tax bill come tax filing season.