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!
Hi, I’m confused on how to fill out a w-4 form correctly. I am a full time student, so should I only claim one allowance since I only have one job. Or should I claim zero?
Hi Wendy,
You actually have the choice to claim one or zero on your W-4 form. Your decision will depend on how you would like to pay the IRS their tax this year.
To put it into perspective, if you claim one allowance, the IRS will withhold less money from each paycheck throughout the year. When you file your taxes, you will have a smaller refund issued back from the IRS (or you could end up owing if not enough was withheld).
If you claim zero allowances, you will have the maximum amount of tax withheld from your paychecks throughout the year. When you file your tax return, you will most likely be issued a refund from the IRS. I recommend this option just to ensure that you won’t owe the IRS a chunk of money come tax time.
Hi,
I’m married with two children, we file jointly and my wife is not working. I used to claim 0. But I recently got a new job with high salary. What would be the best option to get decent withheld and refunds? Is there really big difference between 1 and 2?
Hi Ryan,
Congratulations on the new job!
You’ll most likely want to claim 2-3 allowances on your W-4 form. You should take into consideration if you will be claiming your children as dependents. Claiming dependents will additionally lower your tax bill. By claiming zero allowances, you were having the maximum amount of tax withheld from your paychecks throughout the year. This was probably resulting in a refund from the IRS come tax time. By claiming two allowances, you’ll see more money in each of your paychecks with a smaller refund after filing.
I am a single mother of one child. I recently started a new job. I am not sure what number to put for my allowances for both Federal and state. Some people said I should claim 3 and some say 2 for both federal and state. At this point I am confused.
Hi Morgan,
A new job- congratulations!
The first thing about completing your W-4 is that there is no magic rule to follow. However, based on what you stated above, claiming two allowances would be your best choice. This will allow for a substantial amount to be withheld from each paycheck to cover your taxes owed while also having a good amount in each paycheck for you. If too much is withheld throughout the year, you will be issued a refund after filing taxes. If too little is withheld throughout the year, then you will have tax due when filing.
Hi.
I just started a part time job after being out of the work force and raising my children. I made $256 in a two week pay period. I file married, jointly and claim zero. I received my first check and all that was taken out of my paycheck was for Social Security. I phoned the the owner of the company and he said, “You wouldn’t have anything removed or State and Federal because you pay is so little.” Is this correct? I can’t get a hold of my CPA. Could you please let me know if this is correct as I don’t want to pay anything at the end of the year.
Thanks.
Hi Steph,
Congrats on the new job!
That is correct. If an employee does not meet the taxable wage base, then they would not have any taxes withheld from their paychecks. You should double check that your W-4 form tax status is not checked as “Do Not Withhold” as well. If not, then you’re employer is correct.
Hi, I’m a dependent student, but I pay for school myself (my parents deem it’s my responsibility which I agree with). However, they also receive the American Opportunity tax credit even though I’m the one paying. Is there a way that I get to claim that credit despite being a student?
Hi Stephanie,
There are several requirements that need to be met in order to claim the credit; one of which is that the person claiming it must also be filing a tax return. You’re parents are eligible to claim the credit since they are claiming you as a dependent right now. If they agree not to, then you would be able to claim the credit instead with your tax return. There is additional information listed on the IRS website as well. It seems overwhelming but it is important to read through and understand the guidelines (there are a few helpful examples as well).