Question about allowances on W-4

[dzelins29]

Me and a co-worker were talking today about taxes. We both realized that there is a possibility that our employer changed our allowances from 1 to 2.My girlfriend works for the company as the bookkeeper, she said she never changed either one of our W-4s. We both remembered that when we filled our W-4s we wrote down 1 for our allowances.

Is there any reason why an employer would change this information? Would the company benefit in anyway by having employees withhold less taxes each pay period?

I just can't think of any reason as to why our allowances would have changed.

[erchess]

Allowances

I think you should consult a tax professional in your area. This board is not for the general public. it is for tax professionals. I can tell you that if you have too little withheld from your pay it will get you and not the company in trouble come tax time. It should be a fairly simple matter for a tax professional to straighten the situation out for you but expect to pay the person something for his or her time and expertise...

[newbie]

Would the company benefit in anyway by having employees withhold less taxes each pay period?

.

No, the company would not benefit, either they pay you or they pay the IRS and your state.

[BOB W]

No, the company would not benefit, either they pay you or they pay the IRS and your state.

A company could benefit by witholding less because it may cause them to to have to pay taxes to IRS and State sooner than there cashflow allows.

Also remember that withholding tables have been decreasing over the years because of lower tax rates.

[JohnH]

Just speculating here, but a company could also benefit somewhat from an admininstrative standpoint if they are a monthly depositor but their "lookback" period is just on the border of $50K or $100K.

By manipulating their withholding to keep the total under $50K, they avoid the additional hassle of being switched to being a semi-weekly depositor having to make their FTD's with 3-4 days of each payroll rather than monthly. Same thing for $100K, except then they become a next-day depositor rather than a semi-weekly depositor.

No additional money in their pocket, but they avoid another administrative hassle going forward. I don't think this is a smart thing to do, just pointing out out a possible motivation.

[Bees Knees]

No company is going to waste a bunch of time trying to manipulate withholding to get a favorable look back period or anything else.

dzelins29, no offense, but this is a message board for professionals, not the general public. Go ask your payroll department to explain why your withholding went down.