- Can I Buy Another House if Mine is Upside Down in Value?
- How to Trade a Car When You Owe More Than Book Value
- What Will Happen if I Filed My Income Taxes and Forgot a W-2?
- Tax Deductions for Travel Expenses While Looking for Work
- Tax Deductions for Impairment-Related Work Expenses
- How to Determine Which Debt to Pay Down
If you hold down more than one job, you are not alone. Approximately 7.6 million Americans held down more than one job as of 2010, according to the U.S. Census Bureau. You can use that extra income to help make ends meet, save for the future or anything else you want, but earning money at multiple jobs affects how your taxes are withheld.
Since the United States federal income tax system is a pay-as-you-go system, you pay your taxes all year long even though you file your federal income tax return only once per year. If you work as an employee, your employer withholds funds from your paycheck and sends them to the Internal Revenue Service on your behalf. You determine how much is withheld by filling out a Form W-4, Employee's Withholding Allowance Certificate.
W-4 Filing Requirement
You must fill out a new Form W-4 and give it to your employer when you start a new job, according to the IRS. The IRS recommends completing a new Form W-4 any time you have a significant life change, such as taking on multiple jobs, but there is no penalty for not submitting a Form W-4 or for not updating your Form W-4 when you take on a second job. You will still have to report all of your income from all jobs when you file your federal income tax return, and if the amount withheld is not sufficient, you might end up owing additional income tax.
Failure to File
If you don't provide a completed Form W-4 to your employer, your employer will fill one out for you, and the results might not be the best option for your situation. Your employer is required to withhold taxes from your paycheck as if you are single and claim no withholding allowances. This is the highest tax withholding rate. This could result in far more taxes being withheld than are required to meet your income tax obligation, which means you'll end up giving the government an interest-free loan until you file your tax return and receive a refund.
Multiple Earnings W-4
Page 2 of Form W-4 includes a worksheet to help you determine the proper way to fill out the form if you have multiple earnings. You may choose to complete the worksheet, or you can use the IRS's online withholding calculator (see Resources). Accurately filling out your W-4 with all of your earnings is the best way to ensure your employer withholds the proper amount of taxes from your paycheck.
- Stockbyte/Stockbyte/Getty Images