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 there I am always pretty confused with tax stuff. I am single, live with my fiancé and we just had a baby in July. I make about $50k per year. We both work, but I work FT while fiancé is home with baby, so there is less financial contribution from fiance. I will be claiming baby on my taxes. Someone at work told me I should change my exemptions to 10 (highest possible?) but I don’t understand how this all works. From the info I read, it looks like I would claim 2 for my exemptions? Can you please advise what would be best? Also, when doing taxes, what are things that can be used to help get higher return? For example, cost of child care when we pay others to watch the baby, buying diapers, etc….how does that all work so we can get best advantage? Thank you!!
Hi Alex,
Congratulations on the new addition!
Ok the first item to address is what a W-4 actually does. It is a way for your employer to estimate how much you are allowing to be withheld from your paychecks to cover taxes due to the IRS. If you claim zero allowances, the maximum amount is withheld from your paychecks throughout the year and will usually result in a refund from the IRS after filing. In other words, if too much is withheld over the year, the IRS will give you back the difference in the form of a check or direct deposit. The opposite is true if you claim high allowances. Your co-worker advised you to claim 10 allowances so that you would have absolutely no taxes withheld from your paychecks. This strategy ensures more money throughout the year but ends in a high tax bill after filing.
One thing to understand is that whichever way you complete your W-4 form, the IRS will get the tax money that is due to them whether it is spaced out throughout the year or whether they issue you a bill to pay at the end of the year. Either way, it totals the same amount. The IRS just gives you some extra lee-way to decide how you would like to handle your income. A basic rule of thumb is to claim one allowance for yourself and an additional allowance for each dependent you will claim on your tax return.
Now, there are ways to increase your refund (or lessen your tax due). Unless you plan on itemizing your deductions, you’ll want to pay attention to above-the-line deductions. Sorry for the tax jargon but these are what will help reduce your gross income and essentially reduce your tax bill. These consist of moving expenses, higher education expenses, student loan interest, etc. I highly suggest doing some research or contacting one of our tax experts to help you determine what you qualify for. You’ll also want to look into tax credits that you are eligible for. A tax credit is different from a tax deduction in that it directly reduces your tax amount owed.
Hi.
I was wondering what allowances I should be claiming. I live with my girlfriend, her daughter and my 2 kids. We just had kids so it puts us at having 4 kids in the house hold and my girlfriend is currently a stay at home mom because of daycare costs in our area.
Thanks
Chris
Hi Chris,
Congratulations on the new addition!
When it comes to claiming allowances on your W-4 form, a basic rule of thumb to follow is claim one allowance for yourself and an additional allowance for each dependent you will be claiming on your tax return. Keep in mind that you can only claim someone as a dependent if they are eligible according to the IRS rules.
I am single, have 2 children, one full time job, and am filing head of household. The exemptions on my w4 are coming out to be 9! So they haven’t taken out any federal all year. I am worried that this will result in me having to owe something to the IRS come tax time. They said its something about how much I make. I am not really sure. But I would like to not have to pay the IRS anything when tax time rolls around. That is what I am worried about. But I don’t make enough money per paycheck as it is to take care of rent and all our bills.
Hello! I am single, head of household, work a full-time and part-time job, and claim 1 dependent. I was told I should claim 4 allowances for my full-time job W-4 form (1 for head of household, 2 for both jobs, and 1 for dependent)? Is this right? I want to get a large paycheck but don’t want to have to owe anything.
Hi Dee,
Based on your tax situation described above, I would advise you to claim one allowance for yourself, an additional allowance for each dependent and and allowance for your head of household status. This would result in three allowances in total. Claiming four allowances may result in you owing the IRS after filing. I would also suggest that you claim zero on your W-4 form for your part-time job. This will allow for more to be taken out of your paycheck but you will most likely see a refund after filing taxes for the year.
I am married. My wife and I live together and both work. I’m full time and she’s part time. We have a kid together. She has another kid with her ex which she claims every other year. What number should I claim?
Hi Dave,
A basic rule of thumb for completing your W-4 form is to claim one allowance for yourself and an additional allowance for each dependent you will claim on your tax return. Since you are married, I would advise that you claim one allowance for yourself and then the spouse with the higher earned income claim the additional allowance for your child together.