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!
Hello,
I’m single and head of household. Should I put 2 for my allowance? I don’t really care if I don’t get a large refund at the end of the year, as long as I won’t owe anything when I file. Right now, I have 1 as my allowance, and I think there’s still a lot of withholding being taken out of my paycheck, so if I could put 2 and not owe anything that would be great.
Please advise.
Also, for next year, I’ll be claiming my mom as my dependent. If I don’t change my allowance this year, would I be ok putting 2 for the year 2015 and guarantee to not own anything?
Thanks!
Hi Jennifer,
You should be okay with claiming two allowances as head of household. The same goes for next year when your mother is your dependent.
Hi, My wife and I file jointly and have 3 children and a mortgage. I claim one while she claims zero. With a combined income of approximately $140,000 we barely break even and sometimes owe at the end of the year. My question is, how much less can I expect to take home every two weeks if I change my allowances from one to zero?
Thanks,
Hi Mike,
The size of a withholding allowance depends on the length of your pay period along with the amount of money you earned and is derived from an annual basis amount that is equal to the amount of one personal exemption.
For example, in 2012 the annual basis was $3,800. To figure the size of a withholding allowance, divide the basis by the number of pay periods. If you were paid weekly in 2012, divide $3,800 by 52 for a withholding allowance of $73.15.
I am single and recently just started a new job. I filled out my W-4 and the total comes to 2. Ive never claimed 2 before, always one. Should I change one of the lines to zero where i put a one? I don’t want to have to be owing any money at the end of the year.
Hi Michele,
When you fill out your W-4 by following the directions on the document, you are calculating the maximum amount of allowances that you can claim. In your case, the maximum amount you can claim is two. This does not mean that you can’t claim less. In fact, I suggest claiming zero or one allowance being that you are single and have one job.
I am married with four kids. Husband and I both work full time. How many allowances should I claim? I want a bigger paycheck and still get a good tax refund. Please advise.
Hi Noelani,
Typically it is more beneficial for the spouse who earns the higher income to claim the majority of deductions.
The general rule is that the more allowances you claim, the less withholding you’ll have taken out of your paycheck. If you claim zero, you’ll have the maximum amount taken out. If you claim a large number, you’ll have less taken out. The absolute ideal scenario is to have your tax liability (or refund) at the end of the year be as close to zero as possible.
I also suggest taking a look at the IRS Withholding Calculator. It only takes a few minutes to complete and will give you the most accurate amount of allowances to claim in order to reach that break-even point at the end of the tax year.
My husband and I have been married for 25 years and always filed joint. He owns his own business and I have always worked small jobs so I could stay home when the children were young. Now that the children are in college, I have started my career again. Unfortunately my husbands business shows a loss now, and I have a nice salary with claiming 0 deductions. Would it be better to file married filing separately or continue to file married joint for a better refund?
Hi Denise,
Filing jointly usually gets you a bigger refund or a lower tax bill, and most married couples file joint returns, but there are certain cases where it might be to your advantage to file separately.