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 Tax Advisor!
My wife and I are both employed. I always thought that in such a scenario, both of us should put a -1- as allowances and we have done since the beginning of the year. I just ran it all through the W4 calculator and it’s telling me we’ve severely under-withheld, that we should set to -0- and pay a couple of hundred extra on top each pay check. Does this sound right? Very confused/worried now!
Mike.
Hi Mike,
If you are each claiming one allowance on your W-4 form, you should not be told that you are severely under withheld. I suggest trying the calculator once more to see if you receive different results. It could simply be that you mis-entered an amount that altered your results the first time.
Im married and have one child and my wife doesn’t work and I file married but separately with a allowance 0 to get a bigger refund check is that ok to do?
Hi Jerry,
You don’t need to worry about the IRS coming after you for doing this. The W-4 is only used to offer an estimate of how much can be withheld from your paychecks throughout the year to cover tax due to the IRS. As long as you report and claim everything honestly on your tax return once tax season rolls around, then the IRS will be happy. They either get their tax due throughout the year or once the taxpayer files their return and is issued a tax bill.
Hi,
I am starting a new job and I need help with the w4. I am married with 1 child and we file jointly. I don’t know what to put down for claims in order to have the right amount of taxes taken out so that I don’t owe a large sum at the end of the year and I don’t want to give Uncle Sam an interest free loan with my money. My husband makes more than me and we also pay for daycare. Do I claim 3? The allowance page confuses me and doesn’t make since after I have entered the numbers. Can I leave that page blank? Any help, videos, chat support to get help with how to fill out a w4 correctly? Any advice would be greatly appreciate it.
Hi Sandy,
You and your husband may want to each claim one allowance and then the spouse earning a higher income claim an additional allowance for your child. In your case, you may want to also claim an additional allowance on your W-4 to cover childcare costs. So you and your husband would each claim two allowances. You can also adjust the amount with your employer at any time throughout the financial year if you feel that too much (or too little) is still being withheld. Although it seems like an interest free loan to the IRS, you will be issued a refund after filing if too much of your income was withheld throughout the year.
As you will see (in extremely small writing) on the W-4 form, you are not required to complete or submit the Personal Allowances Worksheet to your employer. You should only submit the bottom portion under the dotted line. The top portion is for your own reference.
Also, feel free to contact us via free livechat, phone or email support. One of our tax professionals would be more than happy to answer any other questions you may have.
Unsure of what I should enter on the total number of allowances.
I just got hired and no one can claim me. Do not have another job.
Should I enter 1 or 2
Please explain thanks 🙂
Hi Kira,
With only the above information provided, I can only assume you are of a single filing status with no dependents and one job. If that is the case, it would be most beneficial for you to claim 1 allowance on your W-4 form. By claiming a higher amount with that tax situation, you run the risk of not enough tax being withheld from each of your paychecks and then owing the IRS after filing.
I am very confused. My boyfriend and I live together for two years now and we just had a baby in January. I know he put her as a dependent on his W4 form. I am not working but going to school full time and plan on getting a job around August. Do I put her as a dependent on my W4 also?
I do not want to mess up and end up owing a lot of money at the end of the year. We are also not sure what would we have to do if we choose to be seen as Common Law (informal marriage) here in Texas. How would we both go about filling our W4’s out then?
Please help Tax Advisor. We do not want to fill it out wrong and end up paying at the end of the year.
Hi Ruby,
As of now, you and your boyfriend will need to file separate tax returns since you are not married. Only one of you should claim an allowance for your daughter as a dependent on your W-4 since she can only be claimed once on a tax return. Whichever one of you plans on claiming her as a dependent on their actual return should claim the allowance for her.
That being said, if you decide to get married or are considered married under common law, then you will be able to file a joint tax return and would therefore be claiming your daughter as a dependent on that. You should still stick to only one of you claiming an allowance for her on the W-4. This is to ensure that enough is withheld over the course of the financial year to cover taxes to the IRS.