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.
I am a single mother of 1. Head of household and am currently renting a town home. I would like to withdraw the least amount of taxes as I can out of my paycheck.
However, I do not want to owe anything either. How would I go about doing that?
Hi Charli,
In order to get the most out of your paycheck without necessarily owing the IRS after filing your tax return for the year, the best thing to do is follow the personal allowances worksheet on page 1 of your W-4. This will allow you to claim the maximum amount of allowances based on your specific tax situation.
I am married, separated not yet divorce no kids either. I make $80K a year while my still husband makes $140K. Since we got married he asked me to fill my W4 up as “single” “zero” (no deductions) so I feel they are taking way too much from my paycheck. We always file “join” and In 6 years of marriage I have never seen a return from the IRS and actually we end up paying about $4000 in taxes every April, which I am responsible for half. The other day I saw he is claiming “marry” “4” while I claim “single” “zero” and while they hold a lot from my check, I am still liable for at least 2k every April… Could my still husband be taking advantage of me? Show I clam “marry” “2”? What is your advise for me? I am just tired with the fact I can’t not even afford rent by myself right now and I am still owning to the IRS….
Hi Ana,
Based on what you mentioned in your comment, your theory may be correct. You see, the more allowances you report on your W-4 form, the less is withheld from your income (and the more you receive in your paychecks). The less allowances you report, the more is withheld. Claiming zero allows your employer to withhold the maximum amount to put toward taxes. If you are filing a joint tax return, then everything is equally split. Based on the amount of allowances you and your husband are currently claiming, he is having less income withheld than you are. Come tax time, you will both still be responsible for the entirety of the tax due. Currently your income is going toward the majority of the tax due. That being said, if you plan to file a joint tax return again for this tax year, I suggest updating your W-4 form to claim more allowances. You don’t want to face a large tax bill after filing and also high withholdings throughout the year.
I am single, not head of household and have a part time job and a full time job. It looks like I’ll end up owing taxes this year cause I made over $30,000. Should I file 2 at the full time job and 1 at the part time job? I’ve always filed 1 at both but it looks like my check is shorter at the full time job. A big refund would be nice to have next year. Please let me know what I should do? Thanks
Hi Farrah,
When completing your W-4 form, the important thing to keep in mind is that the more allowances you claim, the less income is withheld from your paychecks to cover your tax liability. If too little is withheld from your paychecks throughout the year, then you will end up owing the IRS after filing your tax return. If you claim less allowances on your W-4 form, then you will have more income withheld from your paychecks. If an excess is withheld, then you receive a refund from the IRS after filing your return. Either way, it is the same amount being paid to the IRS.
For your tax situation, if you typically claim one allowance on each W-4 and ended up owing the IRS, you want to lower the amount of allowances you are claiming. I suggest claiming zero allowances on one (or both) of your W-4 forms if you prefer a refund over owing the IRS.
I earn approx 250k per year and wife makes 50k. 2 kids with paid off house. I get a big tax payment every year and tired of paying it. Would like to have a small return rather than pay tax bill at end of year.
On W-4 how many dependents should I claim. I think I should only claim myself so have total of 1 on W-4 to take more out of pay chaeck
Hi Jay,
Claiming one allowance may be best in your tax situation. You really have a lot of leeway when it comes to your W-4 form. It should ideally reflect what you will be claiming on your tax return, however, if you prefer to have a bigger refund with less money throughout the year from your earned income (or vice versa), then the choice is really yours. As long as you are being completely honest on your actual tax return, then the IRS gives you full reign with your W-4 form.
Claiming one will definitely lessen the tax bill that you have received in past years. It may even leave you with a nice refund from the IRS.
I’m 17 single and no kids and in 2014 my parents claimed me as dependent, Im going to work part time how many allowances should I have?should I fill out the deductions and adjustments worksheet?
Hi Jailin,
Seeing as your parents will no longer be claiming you as a dependent, I suggest claiming zero or one allowance on your W-4 form. Zero allowances will allow for the IRS to withhold more taxes from each paycheck. This typically results in a higher refund issued at the end of the year with less take home pay. Claiming one allowance will result in a smaller refund but more take home pay. As the choice is yours within reason, you should choose what your financial situation will allow.
When it comes to completing the Deductions and Adjustments worksheet on page 2 of your W-4 form, you’ll only want to complete this if you will be itemizing deductions when it comes time to file your tax return. People will typically choose to claim the standard deduction (which is a fixed amount depending on the tax year) over itemizing their deductions. Itemizing requires you to keep record of every expense you decide to report and the expenses must equal more than the standard deduction. For more information on the specifics, refer to the IRS website page which addresses the standard deduction VS. itemizing deductions.