Your W-4 is an important thing to get right because it ultimately decides how big your tax refund is – or if you owe the IRS money
If you are an employee, you pay income tax through withholding – tax money your employer takes out of your paycheck each pay period.
You can determine how much gets taken out by filling out Form W-4 [Employee’s Withholding Allowance Certificate]. If too much gets taken out, you will receive a refund when you file taxes. If not enough is taken out, you will have to pay the IRS.
You will be asked to fill out a W-4 when you start a new job. But you can also fill out a new W-4 any time if you wish to adjust your withholding. You should especially be sure to do so after major life events such as getting married or the birth of a new child.
How to Fill Out the Form
The first part of the form should be easy enough. It’s just your personal information: name, address, social security number, etc.
The complicated part doesn’t come until line 5, when you have to enter the total number of allowances you are claiming. Allowances determine how much money is withheld from your pay. The higher the number of allowances, the less is withheld.
Most people will be able to use the Personal Allowances Worksheet directly above the form itself to figure how many allowances they should claim. A general rule of thumb to follow is that you should claim one allowance for every person in your family. For example, a married man whose spouse doesn’t work and who has two kids should probably claim four allowances.
Single people actually have something of a choice. They can either claim one or two allowances. Claiming two allowances means the tax withheld will likely ends up very close to their total liability, resulting in a very small refund or even a tax due. If you really want to be 100% sure that you won’t end up owing anything, it’s probably best to claim one allowance. More will be withheld, but you’ll also get a bigger refund.
Special Cases
Here are some tips to point you in the right direction, especially if you have an unusual situation.
- Married couples who plan to file a joint return should calculate their allowances together and divide the total between them. You can use the Two-Earners/Multiple Jobs Worksheet on the second page of the form to calculate your total number of allowances.
Here’s what the IRS has to say about it: “If both you and your spouse are employed and expect to file a joint return, figure your withholding allowances using your combined income, adjustments, deductions, exemptions, and credits. Use only one set of worksheets. You can divide your total allowances any way but you cannot claim an allowance that your spouse also claims.”
- If you plan to itemize deductions or claim certain credits or adjustments to income, there is a Deductions and Adjustments Worksheet on the second page of the form that can help you work out how many allowances to claim.
- If you are an employee at more than one job, you can also utilize the Two-Earners/Multiple Jobs Worksheet on page two of the form.
Once you’ve calculated how many allowances you should claim, you can double check your work by utilizing the IRS Withholding Calculator.
Remember, that a tax refund is not necessarily a good thing. Although it’s nice to receive a big lump of money from the IRS when you file taxes, that’s money that you could have been spending, saving, or investing all year long. The goal is to get your estimated tax refund/tax due as close to $0 as possible.
Photo via Quinn Dombrowski on Flickr.
Im a single father of one….should I claim 1 or 2
Hi James,
If you prefer to see more money in each paycheck, claiming 2 allowances would be best. However, claiming 1 would allow for a larger refund after filing your tax return. Unfortunately, there is no magic number to fill out your W-4. However, I would not suggest claiming more than 2 allowances if you prefer to not owe the IRS.
Hi, How do I fill up a W4. I was recently separated from my husband but yet divorce. I have 2 kids. Can u help me fill up my W4. I have 1 job as caregiver and will have a part time job in the weekend. What is allowance? Should I file Single or still married, filing separately? Please help. Thank you so much.
Hi Franz,
Yes, I would love to help. If you plan on claiming your children on your tax return, I would suggest claiming 2 on your caregiver W4 form. On the W4 for your part time job, you should claim 1.
As for your filing status, you will file as married filing separately since you are not yet divorced. Once you are divorced, you will file as single. If you are using RapidTax to file your taxes, do not hesitate to reach out to our tax team by phone or email with any further questions you may have.
Best of luck!
I am 18, unmarried, dependent, and have two jobs. For item H, I have put 0. I am not sure if I should fill out the Deductions and Adjustments worksheet… What does it mean?
Hi Carlton,
I suggest claiming zero or one on your W-4 form. The worksheets are only to be used as a guide for you. The only part of the W-4 form that is to be provided to your employer is the bottom half of the first page. You will typically only need to reference the deductions and adjustments worksheet if you plan to itemize your deductions on your tax return when you file.
I just got married to someone out of the country that is going to school. As of right now I filled out 3 allowances on my w-4, because I am married, and only have one spouse working. Is this correct?
Hi Sophia,
The general rule is that the more allowances you claim, the less withholding you’ll have taken out of your paycheck each pay period. By following the instructions on the Personal Allowances Worksheet of your W-4 Form, you will calculate the maximum amount that you should claim (Keep in mind that this worksheet will not be given to your employer or the IRS). However, you can always claim less than that to ensure that enough will be withheld from each paycheck. If you claim zero, you’ll have the maximum amount withheld. If you claim a larger amount, you’ll have less withheld. 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 am married and have 3 children. We have been a single income family for 10 years, but I just started working this past July. My husband claims us as dependents. Am I supposed to claim 0 on my form? We file jointly every year. This is just new territory for us and some direction would be appreciated! Thanks!!
Hi Carissa,
Since you are now employed and bringing in an income, I suggest claiming one on your W-4. It is typically more financially beneficial for the spouse with the higher income to claim the majority of dependents. If your husband has the higher income, then I suggest that he continue to claim your children (and vice versa if you have the higher income). If you both have incomes that are about equal, then I suggest splitting the dependents each of you claim.