Filling out a W-4 is less mind-boggling than you think.
One of the first things you have to do when you get a new job is filling out a Form W-4 [Employee’s Withholding Allowance Certificate]. It is essential to complete a W-4 correctly because it determines how much tax will be withheld from your pay and how large your tax refund will be.
The first half of the form is pretty easy. You just have to fill in your name, address, and marital status.
Then you have to figure out how many allowances to claim. This number will determine the amount of your withholding.
Number of allowances to claim
Generally, the number of allowances you should claim will correspond to the number of personal and dependency exemptions you can claim on your tax return, but this is not always the case. Claiming zero allowances will result in the maximum amount of tax withheld. Every additional allowance you claim on top of that means that a little less tax is withheld.
You’re a Dependent:
If you can be claimed as a dependent on someone else’s tax return (ie: your parent’s, aunt’s, etc.), you should claim zero allowances. When you’re a dependent, the person who claims you get the benefit of your personal exemption and you, yourself, will end up owing slightly more in taxes. Hence, the tax should be withheld at the maximum rate of zero allowances.
You are Single:
As a single taxpayer, your W-4 form is straightforward enough but you do have several options when it comes to claiming allowances.
- If you’re single with one job, the allowances to exemptions ratio don’t exactly hold true. Most single people claim one allowance. However, this is likely to result in a refund. If you prefer the extra money after filing, then claiming one allowance is the choice for you.
- Claiming two allowances would get you closer to your exact tax liability, but may actually result in some tax due. That being said, you would have more take-home pay throughout the year since your employer wouldn’t be withholding as much tax from your paychecks.
Essentially you can choose whether to claim one or two, depending on the rest of your tax situation, but it’s probably safer to claim one.
You are Married:
Have you tied the knot? This can drastically change your tax situation. Don’t worry; it’s typically for the better. Being married opens up a few doors for you when it comes to tax benefits. You can now file a joint tax return. This is the absolute ideal filing status in regards to taking advantage of your benefits as a taxpayer. In most cases, being married also allows you to claim more allowances on your W-4.
- If you are married with no children, you should claim two allowances.
- If you are married with one child*, you should claim three allowances.
- If you are married with two children*, you should claim four allowances.
Other Situations:
Things get a little more complicated if you have multiple jobs, your spouse works, or you intend to itemize your deductions. In these cases you should turn your attention to page two of the W-4:
- Deductions and Adjustments Worksheet: Use this worksheet if you plan to itemize deductions on your tax return or claim adjustments to your income.
- Two-Earners/Multiple Jobs Worksheet: You will be directed to use this worksheet from the Personal Allowances Worksheet, line h. It is only necessary if you are married and earning a combined income of over $20,000 or if you are single with two jobs earning over $50,000.
The IRS also has a withholding calculator on their website that can give you a second opinion on how many allowances to claim.
The last thing you need to do is figure out if you are exempt from withholding. For most, this is not the case. Essentially, you are only exempt from withholding if all of the following is true:
- you aren’t a dependent,
- you had the right to a refund of all income tax withheld last year, and
- you are not required to file a return this year.
If you are exempt, you can write exempt in line seven. You’re done! All you have to do now is sign the form and hand it over to your employer.
Update Your W-4 For A Larger Refund or More in Your Paycheck
Even if you’ve been at your job for a while, it’s a good idea to monitor and, if necessary, update your W-4 every year. This is especially true if there’s been a major event in your life such as a marriage or the birth of a child.
The goal is to get your refund or tax due as close to $0 as possible. Getting a big refund when you file taxes is a great feeling. It can also trigger that your withholding needs to be adjusted. The reality is that you could be enjoying that money throughout the year instead of having it withheld from your paychecks.
Regardless, during tax season you’ll need to report the total earnings and tax withheld on a tax return. Use RapidTax to file your taxes without a hassle and receive the maximum refund possible!
Hi there, I have a question. My fiancee has been claiming our 6 year old son since we weren’t married. He has recently passed away. So I am filling out a new W-4 form for 2015. I don’t want to have to owe anything and would like to receive a refund. I am finding the form hard to fill out.
So for A- do I enter 1 for myself since no one else can claim me. B- 1 because I am single and have only 1 job. C- 0 since I have no spouse. D-1 for number of dependents. E- 1 for Head of Household. F-1 since I have at least $2000 of child or dependent care expenses since he goes to daycare. G- 2 for the Child Tax Credit since I make less than $65,000 Then the total is 7? Is this correct??? I heard the higher the number the more likely you will have to owe which I don’t want to, I would like to receive a refund. Thank you.
Hi Stacey,
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 directions on the Personal Allowances Worksheet of your W-4 Form, you will calculate the maximum amount that you should claim. 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.
Hi there. I have one child and I’m a single mother. I started working at my job since 2013 so when I filled my taxes I had federal withheldings but this year I have had no federal withheldings. I haven’t changed anything since I filled my w 4 when I got hired. I made a little less this year than last year. What’s going to happen with my refund this year?
Hi Roxana,
It is possible that taxes will not be withheld if you do not earn over a certain amount of income. However, I do suggest bringing this to the attention of your payroll department since you have not updated your W-4 at all.
Hi, my mom is currently staying with us and helps taking care of our kids. Will it be more beneficial to claim her as a dependent on our tax or in contrast, paying her $5,000 for help us taking care of our kids and claiming that as child care expense when we file our tax and not claiming her as dependent?? We have two kids so I know the maximum for childcare expense is $6,000, but I know if we claim her as dependent, we will not be able to claim for those child care expenses so we try to figure out which way is more beneficial for our tax. Thank you so much.
Hi David,
I would suggest claiming the child care expense. However, it will depend on a few other factors. If you prepare an account with our website, you will be able to manually enter both options and see which one works in your favor financially.
i am trying to fill out my w-4 form but need help on section G. Child Tax Credit (including additional child tax credit). See Pub. 972, Child Tax Credit, for more information.
• If your total income will be less than $65,000 ($100,000 if married), enter “2” for each eligible child; then less “1” if you
have two to four eligible children or less “2” if you have five or more eligible children.
i am married and file joint my spouse and we work one job each making less than $100,000 we have 4 children between the ages .5-7 years old. so i want to know which one of these calculations is correct.
#1(4children x 2each= 8-1= 7)
or
#2(4children x 1each= 4)
Hi David,
If you and your spouse earn a combined income of less than $95,000 for the year, you will use calculation #1. If you and your spouse earn a combined income of $95,000 or more, you will use calculation #2.
By following the directions on the Personal Allowances Worksheet of your W-4 Form, you will calculate the maximum amount that you should claim. 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 previously work a full time job and have acquired a part time job also. What is the correct way to fill out a w-4? I am single with no kids. Thanks
Hi Anthony,
I suggest claiming one on the higher paying income and zero on the lower paying income.
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.