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!
im a single mother, i had her June 26 2015 and she is my only child. my job has currently been bought over with a new company and i am asked to fill out a w4 again to join the new company.
what is confusing me is the $2000 child care or dependent expenses to claim a credit. i do pay for child care but its not to a professional baby sitter or daycare. i pay my neighbor to watch she so i can go to school and work.
and
“Child Tax Credit (including additional child tax credit).
• If your total income will be less than $70,000 ($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.
• If your total income will be between $70,000 and $84,000 ($100,000 and $119,000 if married), enter “1” for each eligible child”
my income will definitely be less then 70,000 but i don’t understand what to put here. do i put 2 or one? because this part is really confusing
basically i want to fil it out so get a good tax refund with out taking to much out of my check
Hi Gabbie,
Congratulations on the new addition!
You can claim the childcare tax credit if you meet the qualifications set forth by the IRS. Even though your care provider is your neighbor (and not a professional daycare or nanny), you may still qualify. When it comes to your babysitter, you must provide the name, address and Taxpayer Identification Number (TIN) of the person who provided the care. The taxpayer ID number is either a Social Security number or an Employer Identification Number. Ask your care provider for the number.
When you complete your W-4 form, a good rule to follow is claim one allowance for yourself and an additional allowance for each dependent you plan to claim on your tax return. Add an additional allowance if you plan to file as head of household.
Something to keep in mind is that the more allowances you claim, the less your employer will withhold from your income to cover taxes you owe. The less allowances you claim, the more you’re allowing your employer to withhold. The Childcare tax credit will decrease your tax due dollar-for-dollar so if you are eligible to claim it, do.
I am a single mom and have 2 boys, in their 20’s, both in college. Neither of them are working and both live at home still. I support them 100%, can I still claim them as dependents?
Hi Kitty,
If your sons meet all other eligibility requirements set forth by the IRS, you can claim them as eligible child dependents until they are 24 years of age as long as they are full-time students. It sounds like you are aware of the IRS guidelines since you mentioned that you supported them 100% throughout the year and they are both living with you for the entire year.
Last year I made 15,000 gross. This year I made only 6,500. Will this hurt my amount of return? I am single – head of household and have 1 child age 11 and that is it. Thank you.
Hi Nancy,
This will most likely bump you down into a lower tax bracket so your tax will be adjusted accordingly. In other words, less tax was probably withheld from your paychecks throughout the year but you also probably owed less tax to begin with because you earned less income.
Hi Ben,
I was curious on how to fill out my W-4 and W-2 form for both me and my wife. Could you tell me what the best way to file for both of these forms would be for both my wife and I we also have one child that I will claim and I make more than she does. We will be filing joint.
Hi Lee,
A W-2 form is issued to you by your employer at the close of the tax year so that you can reference that when filing your tax return for the year. You are not responsible for completing that.
You are, however, responsible for completing a W-4 form and providing it to your employer so that they can control how much of your income is being withheld for taxes. If you are filing a joint tax return, it is typically most beneficial for the spouse earning the higher income to claim the majority(or all) of the allowances on their W-4. In your situation, it would be best for you to claim two allowances (one for yourself and one for your child dependent) and your wife claim either 0 or 1 allowance for herself. If you prefer more take-home pay throughout the year, you can claim a higher amount of allowances. Just be aware that this could result in owing the IRS if too little is withheld for taxes.
Hi,
I was hurt on the job. I then went on Long Term Disability back in April and was paid by a 3rd party since. No one told me to fill out any tax forms and no taxes were taken out. looking back now that it’s tax season am I going to have to pay on this ? Some friends say yes-some say no since its disability. Help me please?
Hi Ben,
I hope your recovery is coming along alright. Whether or not your disability income is taxable or not depends on what type it is. Disability that is paid via an insurance company for lost wages, loss of limbs, loss of vision, etc… may not be taxable depending on the specific situation:
1. If the premiums were paid by your employer and were not included in your taxable income, then it IS TAXABLE.
2. If you paid the premiums out of pocket or with payroll deductions that came from your after-tax-income, then it is NOT TAXABLE.
3. If you and your employer jointly paid the premiums, ONLY the disability amount covered by your employer’s payments ARE TAXABLE.
Retiring early due to disability is a bit different, tax-wise. The pension that you receive through an employer-paid plan is considered wage income until you reach the minimum retirement age. Once you reach that minimum retirement age, the pension is no longer reported as wage income but as pension income and is taxed as such.