Question
- Please explain if you agree or disagree with this statement and why: I would advise the employee not to adjust their W-4 for the
- Please explain if you agree or disagree with this statement and why:
I would advise the employee not to adjust their W-4 for the additional $100 to be withheld. Id suggest setting up a separate savings or even investment account and arrange a direct deposit amount or automatic transfer to put that money in the new account. The account should be separate from your standard accounts, so the money is not as easily accessible or available for impulsive spending. If they arent planning to use the bigger refund for a large purchase/spending, Id suggest adjusting their retirement contributions instead. The money wont be accessible but investing in your future and retirement is very important and the amount invested will grow. Bottom line, there is no gain to allowing the government to hold money from your paycheck for a year.
Legally, the employee is allowed to change their W-4 at any time and as many times as needed. As long as the information provided on the W-4 is truthful there is no legal consequence for adjusting withholdings. A false or fraudulent W-4 usually claims the individual is either entitled to too many withholding allowances or that the individual is exempt from withholding. In that case, the employees could be fined not more than $1,000, or imprisoned not more than 1 year, or both according to Title 26, United States Code, Section 7205(a).
If it were me, Id open a Roth IRA and contribute the $100 weekly to that in addition to my traditional 401K contributions.
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