The taxes that W-2 employees are required to pay are directly withheld from their monthly paychecks by their employers, who estimate – or more likely overestimate – what they will owe at the end of the year. That means full-time employees almost always overpay and end up receiving a refund.
Employees also fill out W-4 forms to give their employers information about their individual tax situation, so that their employer doesn't withhold more tax than necessary from their paychecks. The W-4 is an IRS tax document where employees can claim tax credits they qualify for, such as:
More on credits like these later.
If you're filling out a W-4, you should also report any self-employment income outside of your full-time work. More tax will be withheld from your paycheck, but you won't need to worry about paying quarterly
estimated taxes on that income yourself.
As a full-time employee, you can claim personal tax deductions like
charitable contributions,
medical expenses and
student loan interest.
Employees can also contribute to retirement accounts like traditional IRAs or a 401(k) plan. These contributions can help lower your tax liability further and get you a larger tax refund. Just make sure you make these contributions during the year and before the tax filing deadline.
When you file your 2024 tax return, make sure to carefully check all the deductions you claim, so that the return you file is error-free, and you're sure to get any tax overpayment refunded accurately.
FlyFin A.I. simplifies and automates this part of the tax filing process, helping you track all your deductions and find every possible write-off, as well as offering 24/7 CPA consultation and tax filing.