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!
I’m married with a child how do i fill out my W4?
Hi Hannah,
The first thing to address is how you plan to file your tax return. You can either file a joint return or separately as a married couple. Filing a joint tax return tends to be the most beneficial. The next thing to consider is how many allowances you will be claiming. If you plan to file a joint tax return, then it is best for the spouse who earns the higher income to claim the majority of the allowances. As a married couple with one child, you would most likely want the higher-earning spouse to claim two allowances (one for themselves and one for the dependent). The lower-earning spouse would claim one allowance for themselves.
Hi, I need some help regarding Two-Earners/Multiple Jobs Worksheet. My husband and I have been to the US for only 2 months now and he’s been working for a month, I’m starting in January and I need to file our W-4 with them. Should we even bother with this Two-Earners worksheet? I claimed 2 allowances. We have no kids. What should I do? Should I fill out the Deductions and Adjustments Worksheet? We don’t have any mortgage or medical costs… Thanks!
Hi Katarina,
Congrats on the new job!
You would only need to complete the two-earners worksheet if you are directed there from line H on your W-4 form. Keep in mind that this is completely optional. Also you only need to consider the deductions and adjustments worksheet if you plan to itemize your deductions (instead of claiming the standard deduction) or claim certain credits or adjustments to your income. When it comes to claiming allowances, the higher amount that you claim, the less will be withheld from your paychecks for tax owed to the IRS. The lower amount of allowances you claim, the more is withheld from your income throughout the year to cover taxes. If too much is withheld, you will be issued a refund from the IRS. If too little is withheld from your income to cover taxes due, than you will need to pay the IRS a tax due amount after filing your tax return for the year.
I have been serving in the US Army for two years now. I am married with 5 kids. My wife is starting a job and I am trying to navigate this W-4 business…help!!! I claim her and all kids on my W-4, but need to know what to have her put on her form. What would you suggest? It would be easier at to get her started this year and go back and make and adjustments at the beginning of 2016. Unless I am mistaken, I claim somewhere around 8-10 for my allowances now.
Thank you,
Chris
Hi Chris,
When it comes to claiming allowances on your W-4, you have a bit of leeway with how you choose the IRS to collect the taxes you owe to them. You can either have them collect all of it throughout the year via your paychecks OR pay what you owe after you file your tax return with a tax bill issued to you. As long as you do not let penalties accrue, the amount will be the same. That being said, if you claim a high number of allowances, you will have less withheld from your paychecks (resulting in a tax bill). If you claim a low amount of allowances, you will have more withheld from your paychecks; typically resulting in a refund due to over-paying. Claiming zero allowances will allow the maximum to be withheld from your paychecks.
You have a few options once your wife starts working. You can continue to claim all of the allowances that you are now and have her claim zero allowances. This would be helpful because the amount that she gets back in her refund could be applied towards the tax due bill that you receive. You could also split allowances right down the middle between the two of you. This is typical of couples that earn about the same amount of income. Another option would be for your wife to claim one allowance while you lessen the amount you’re claiming.
I claim 0 on my w-4. But number 7 is the one that I don’t understand. I do expect to get a refund and owe nothing. But do I put exempt on that line? And after reading a few others comments on here, I was wondering if I would claim 1 and have more money on my take home pay if at tax time will I owe into them?
Hi Tania,
You can claim exempt if you meet both requirements on the W-4 form (listed in the top instructions). The exceptions are if you are being claimed as a dependent, you plan to claim someone as a dependent, you will itemize your deductions, or you will claim tax credits. If any of those apply to you then you cannot claim EXEMPT at Line 7.
To answer your next question, claiming one allowance is most advisable to single taxpayers with one income source and no dependents. However, you have the option to claim as many allowances as you see fitting to your tax situation (within reason). If you currently claim zero allowances, then claiming one allowance will allow a bit more in your paychecks throughout the year but typically still a good amount being withheld by the IRS to cover taxes owed. In order to fully get the whole picture, you may want to take a look at the withholding calculator on the IRS website or reach out to our tax pros here at Rapidtax. The answer requires a bit more knowledge on your specific situation.
Hello,
I am married with two children, My husband is not a legal citizen (not yet) and I am having a hard time filling out the W-4. I claim head of house hold and my total allowances comes up to 6 when do not file togther and I am not getting federal tax taken out. What do you suggest we do?
Hi Lucia,
If your husband is not a citizen of the U.S. then you are required to report your filing status as single. I advise you to claim one allowance for yourself and an additional allowance for each dependent plus one more for head of household. Although your total allowances are coming out to be 6, that may be higher than you realistically need to claim resulting in you owing the IRS after filing for the year.