how withholding allowances worked in the past
before 2018 an individual was required to fill out form w 4 when hired by an employer the form required certain personal information such as their name and social security number and the number of allowances to be made 2the employer used the w 4 to determine how much of an employee s pay to subtract from their paycheck so as to remit to the tax authorities the total number of allowances claimed was important the more tax allowances claimed the less income tax would be withheld from a paycheck the fewer allowances claimed the more tax would be withheld 3the withholding amount was based on filing status single or married but filing separately married and filing jointly or head of household and the number of withholding allowances claimed on the w 4 it was important to claim the right number of allowances to avoid trouble when filing taxes or to keep from giving the government an interest free loan by paying too much in taxes only to receive the amount back later as a refund 3