The last thing you want to do is frantically run up to your boss asking “How many allowances do I claim on my W-4?”.
Being aware of the number of allowances you are claiming on a Form W-4 [Employee’s Withholding Allowance Certificate] is important for a variety of reasons. Most importantly, the number of allowances you claim on a W-4 determines the following;
- how much tax will be taken from your income (aka the withholding amount)
- the size of your tax refund
Steps to filling out a W-4
You’ll need to follow four simple steps when filling out your W-4 Form:
- Fill out your personal information (Name, Date of Birth, Address, Marital Status)
- Know the number of personal and dependency exemptions you are claiming on your tax return.
- Based on the number from step 2, use that number to help determine your number of allowances.
- Don’t forget to sign the W-4 and turn it into your employer!
The allowances you claim while filling out a W-4 if you are single will differ from the allowances you claim if you are married or have kids.
Claiming zero allowances
- The maximum amount of tax is withheld. Meaning, when it comes time to file your tax return you will most likely receive a refund.
- You’re being claimed as a dependent on someone else’s tax return.
Claiming one allowance (ideal if you are single with one job)
- You’re single and have one job. Claiming one allowance will most likely result in a refund when you file your taxes.
Claiming two allowances
- You are single. Claiming two allowances will get you close to your tax liability but may result in tax due when filing your taxes.
- You’re single and work more than one job. Claim one allowance at each job or two allowances at one job and zero at the other.
- You’re married.
Claiming three allowances
- You are married with one child.
Claiming additional allowances
- File as head of household if you are eligible. You are able to claim additional allowances.
- You had at least $2,000 of child or dependent care expenses that you plan on claiming credit
- You’re eligible to claim the Child Tax Credit
Can I fill out a new W-4 form?
Yes, employees can submit a new W-4 form to their employee at any time during their employment. Have you recently started a second job, had a baby, or tied the knot? Life changes such as these should encourage you to update your W-4 withholding.
A great tool to help you while filling out a W-4 is the IRS Withholding Calculator, located on the IRS website.
Claiming zero allowances means less take home pay, but a bigger tax refund during tax season.
The number you report on a W-4 will ultimately determine your take home pay and your tax refund. Don’t write down any number. Take the few extra minutes to really assess your situation and fill in the W-4 accordingly. By doing so you’re less likely find yourself in a difficult financial situation.
Then, when you’re ready to file your taxes, you’ll have a heads up on whether or not you’ll be receiving a tax refund!
I am in the middle of a divorce. We separated in October, filed married joint in January. We have 2 children and I will be claiming one of them each year. My W4 was previously Married 1. Do I change this now to Single 1? I want to make sure that there are enough taxes taken out so that I get some kind of refund at the end of the year.
Also, my soon-to-be-ex and I split the cost of daycare for my 3 year old. I pay $380/month. I know that this has something to do with filing as head of household. What do I need to do from here on out (if anything at all)?
Also, I am going to have to pay my soon-to-be-ex about $150/month in debt equalization pay. Will this have any kind of impact on my filing?
Bottom line is that I am totally new to this and I don’t want to get stuck with a tax bill at the end of the year.
Thanks for any advice.
Mike
Hi Mike,
It is important to update your W-4 form to reflect what your tax situation will be on the last day of the year (12/31/2016). If your divorce will be final by then, you can (and should) update your W-4 now to Single.
You mentioned claiming Head of Household as your filing status. Even if you do qualify to do so, you will still update your W-4 form to single (as you will notice you do not have the Head of Household option on the W-4) and then claim Head of Household on your tax return. You can claim Head of Household as your filing status if all of the following are true:
-You were unmarried as of December 31, 2016.
-You paid more than half the cost to run your home in 2016 (rent, mortgage, utilities, etc.), AND
-You supported at least one qualifying person.
When it comes to your debt equalization pay, otherwise known as a divorce settlement, you may be able to deduct it on your tax return. If the payments are classified as spousal support or alimony, than you can deduct the costs. However, if it was considered a property settlement, then you cannot. I strongly suggest speaking with your lawyer or other specified party further about this before deciding whether or not to claim it on your tax return.
I claim 1 dependent my self right but at the end of the year when I do my taxes I claim 3 my self my son and my mother . I would like to know if I claim 3 on my check will I get less taxes at the end of the year
Hi Jessica,
If you increase the amount of allowances you claim on your W-4, you will have less income withheld from your paychecks throughout the year. This could result in owing the IRS after filing your tax return if too little is withheld from your paychecks.
I have 2 part time jobs, single, and no dependents. Should I put 1 allowance for one job and zero for the other? Also do I need to put something down under “additional amounts” on the w-4 form?
Hi Jo,
This is the more beneficial route to take when completing your W-4 form if you would prefer to have more withheld throughout the year so that you don’t end up owing the IRS for under-withholding come time to file your tax return. When it comes to claiming an additional amount, I suggest using the ‘Multiple Jobs Worksheet‘ on page 2 of your W-4 form. This will take into account your income from both jobs and help you to adjust the necessary amount to claim in addition to your withholding allowances.
I am married with 3 children. Can both my wife and I have 4 allowances or just one of us?
Hi Josh,
Typically, the spouse earning the higher income will claim the majority of allowances on their W-4 form. If both you and your spouse are earning about the same amount of income, it is common to split allowances. I do not recommend you each claiming the total amount if you are filing a joint tax return. You will see high take-home pay since little will be withheld from your paychecks. However, you will most likely end up with a tax bill from the IRS after filing.
Hello,
My question is I am single claiming 1 allowance on my w4. I have a 2 year old son that don’t live with me, but I pay child support and also have an parenting agreement approved by courts that we each alternate years in claiming him as a dependent. Should I claim 2 allowance during that year prior to filing taxes?
Thanks.
Hi Nick,
I would suggest claiming a higher amount of allowances for the years that you will be claiming your son as a dependent on your tax return. Doing this will allow you to have more tak-home pay and less withheld.