The W-4 is a form used to collect information about your tax situation. You employer uses it to determine how much tax is taken out of your paycheck. It’s easy to forget to update your W-4 form, but whenever you get married, have a child, or even move to a new address, you need to complete a new W-4 form.
Getting Started
The W-4 looks intimidating, but the bulk of the form is instructions. Items A through H are part of a “personal allowances worksheet” that you can keep for personal reference. If you’re married and filing jointly or single and work multiple jobs, you have a special worksheet on the second page. There’s also a worksheet for different deductions and reporting other sources of income, such as dividends or interest.
The bottom quarter of the form is detachable. That’s the actual W-4 form that you hand to your employer. When you fill out your W-4, you’ll need to write down your name, social security number, and address. Indicate your marital status, and if you haven’t gotten a social security card with your new last name, you need to indicate that as well.
Claim Your Allowances
The amount of taxes taken out of your paycheck depends on how many allowances your claim. Refer to the allowances worksheet to determine what you need to claim. The explanations on the form are pretty brief, so we’ll go over each of them in detail.
- Enter “1” for yourself if no one can claim you as a dependent.
If you’re a teen working your first job, your parents likely claim you as a dependent. Are you a college student or young adult? Talk to your parents about whether or not they claim you. The talk may be awkward, but it’s necessary. If you parents claim you as a dependent, you’ll miss out on this allowance. - Enter “1” if: You are single and have only one job; you are married, have only one job and your spouse does not work; or your wages from a second job or your spouse’s wages (or the total of both) are $1,500 or less.
If you are the breadwinner of your household, give yourself an allowance here. You cannot claim an allowance if your second job or your spouse makes a large contribution to the household income. It’s hard to believe that IRS considers an income exceeding $1,500 a year to be significant, but it’s the tax truth. - Enter “1” for your spouse.
Pretty self-explanatory here. If you have a second job or a working spouse, you can decide not to claim this allowance to avoid having too little tax withheld. That seems like a good problem to have, but its best not to avoid paying what you have to. - Enter the number of dependents (other than your spouse or yourself) you will claim on your tax return.
Who qualifies as a “dependent”? Count children and live-in relatives that you financially support. - Enter “1” if you will file as head of household.
If there’s no one in the household, then you’re automatically the head, right? Nope. However, you can be a single parent or single and taking care of a live-in relative, you can qualify as head of household—as long as you’re paying for over half of the expenses. - Enter “1” of you have at least $2,000 of child or dependent care expenses for which you plan to claim a credit.
Another self-explanatory allowance. This does not include child support payments. - Child Tax Credit
Do you qualify for the child tax credit? Are a single parent earning under $65,000 or a married parent who combines for $100,000 with your spouse? Put down “2” for each child. If you earn between $65,000 and $84,000 ($100,000 to $119,000 if you’re married), put down “1” for each child. - Add lines A through G and enter total here.
Find the sum of your allowances and list it here. This is the number you’ll put down on Line 5!
Finishing the W-4 Form
You’re almost done! After you list your allowances, all you need to do is declare whether you want additional taxes withheld from your paycheck and claim exemption from withholding if you qualify.
Why would anyone willfully elect to have extra taxes taken from their paycheck? That’s like giving away even more of your hard-earned money! But you want to avoid having too little taxes taken out of your check, so if you're worried you'll have to pay extra taxes at the end of the year, you can have extra money witheld.
If you’re single with an annual income of less than $15,000 or if you’re married with a combined annual income of $30,000, then you can write “exempt” in box 7. As long as you’ve been exempt last year and expect to be exempt this year, go right ahead.
After you sign and date your W-4, your document is officially complete! Hand in your W-4 as soon as possible; you may need to meet with your spouse to work out some of your witholdings, but your employer will withhold the highest amount of taxes possible until you turn in your W-4.
