Business and Personal Finance Dictionary

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• ALLOWANCE
  
  This is the number you put on your Form W-4 so your employer can calculate the amount of income tax to withhold from your paycheck. The more allowances you claim, the less income tax will be withheld. Usually, you claim one allowance each for yourself, your spouse and each of your dependents. However, you can adjust the number of allowances for your situation -- if you have a lot of deductions that will reduce your final tax bill, you may want to claim more allowances so your withholding will be less.
  
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