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,
I am starting a new job. I am single and my Mom cannot claim me anymore. Should I claim 1 or 2 on my W-4? Thank you
Hi Kim,
Seeing as you have a single filing status with one source of income, you should claim one allowance on your W-4 form. This will ensure that enough taxes are withheld from your paychecks to cover tax owed to the IRS.
Hi,
I am single and just started one job three months ago.
I claim one allowance on my W-4. By calculating my paycheck, my tax will be more than 21,000 dollars a year.
I just got a request to refill my W-4 again, any recommendations?
Hi Sara,
That is an extremely high amount to have withheld for taxes owed to the IRS, even over the course of a tax year. Based on your filing status and having just one source of income, claiming one allowance is what I would recommend. I do suggest double checking your calculation and if that seems to still be the case, you should increase the amount of allowances you are claiming so that you can receive more take-home pay throughout the year.
I am recently married with one child, 1 year old, and my husband and I both work full time but don’t make over 100,000. Right now my allowances are 3. Is that normal? I am trying to stay right in the middle so I’m not having tons taken out of my check, but I wont have to pay at the end of the year either. Help!
Hi Jenna,
Congratulations on the wedding!
A basic rule to follow in order to hit that break even point come tax time is for each spouse to claim one for themselves. The spouse earning the higher income should then claim an additional allowance for each dependent that they will be claiming come tax time.
I’m starting a w-2 contract job; haven’t worked in two years. Husband is retired. We think I should claim 2 – we want it to be as close to 0 come tax time. Does that sound right? We file married / jointly and no dependents. Thanks!
Hi Phyllis,
Claiming two allowances will allow you to have more take-home pay throughout the year but may result in owing the IRS come time to file your tax return. I suggest claiming one allowance.
I am married with two 5 year old boys. On which lines do I claim what. Im so confused
Hi Jason,
The amount of allowances you claim on your W-4 form is only used to serve as an estimate for your employer to know how much they can withhold from your paychecks throughout the year to cover taxes due to the IRS. Taxpayers who prefer to have less of their paychecks withheld throughout the year will claim a higher number of dependents while those who prefer to have a larger refund will claim less allowances on their W-4. In your situation, the spouse with the higher income will most likely want to claim two allowances plus one for themselves. The other spouse can then claim one for themselves. Your other option is to each claim two allowances on your W-4 forms. This is what couples tend to do if they earn about the same income amount.
When it comes to filling out the worksheet line-by-line, don’t stress too much. The only line your employer looks at is line H. In fact, the Personal Allowances Worksheet is solely for your own records. You are not required to provide your employer with anything above the dotted line on page 1 of the W-4.