Federal allowances or withholding allowances are the claimed tax exemptions by an employee on their W-4 form (USA only) that their employers use to find out the amount to subtract from employees' salary to remit to the IRS.
Claiming more allowances than you're eligible for would result in a lower withheld dollar sum and you might end up paying an additional penalty for additional withholding. On the contrary, if you withheld more, you might receive a tax refund from the IRS.
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