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!
Hello,
I just started a new job and I’m making $38,000/yr salary. I cannot be claimed as a dependent and I am single and have only one job. According to the W-4 instructions I should claim 2 personal allowances but I know this will cause me to have higher chance of owing when filing taxes. I realize that claiming 1 personal allowance will be “safer” to not owe taxes when filing, but my question is what would be more beneficial or does it not really matter? Say I would claim 2 personal allowances and because of that I make $1,000 more a year since there are now less deductions taken out of my paycheck and owe $500 after filing taxes, compared to claiming 1 personal allowance and making $500 less and getting back $500 in taxes…then there would then be no difference between claiming 1 or 2 allowances in the end. Maybe there is no clear cut answer. I hope what I’m asking makes sense.
Thanks
Hi Paul,
One of the reasons you are given a good amount of leeway when completing your W-4 form is that whichever way you slice it, you are liable for the same amount of taxes and you’re earning the same amount of income. You can claim more allowances throughout the year if you prefer to see more in your paychecks but possibly owe after filing. If you prefer a refund and less in your paycheck, then claim less allowances on your W-4. As single with no dependents, it is most common to claim zero or one allowance on the W-4 form. Claiming more than that puts you at risk of owing after filing your taxes for the year.
Hello,
I am filling out the W4 and want to avoid having too little taxes withheld. Can my spouse claim me as a dependent? He works full time as well. Also, we have two small children.
Thank you!
Dana
Hi Dana,
Fortunately for us, the IRS allows us to decide (within reason) if we would like the majority of our taxes to be withheld throughout the year or pay them back after filing. Allowances determine how much or how little is withheld. The less allowances you claim, the more is withheld from your paychecks to cover taxes you are liable for. It is common for a taxpayer to claim zero allowances in order to ensure that enough will be withheld and they will have little to nothing owed after filing. In your case, I suggest claiming one allowance for yourself and an additional allowance for each dependent you will claim on your tax return.
Your spouse will not be able to claim you as a dependent. It would most likely be in your best interest, financially, to file a joint tax return with your spouse. Make sure that only one spouse is claiming an allowance for each of your children. Otherwise, when you file a tax return, you may have had too little income withheld to cover taxes owed.
hi, can you please suggest how many dependents to claim? i have 4 children (though one is 20 yrs old, in college, the rest are under 17 yrs old). married and only one income of $70k. right now, i claim 2, and get a refund of around $7k. i would like to not owe taxes, yet get a bigger pay check.
i did go on the IRS site to do the calculations but it is still confusing.
i would like to get a bigger paycheck but like i mentioned, not owe taxes at the end of the year.
any suggestions are greatly appreciated, thank you so much!
Hi Bayareamom,
Not to worry! Claiming allowances on your W-4 can get a little confusing. You’ll first want to determine how many dependents you will be reporting and claiming on your tax return. Since you normally receive a refund of $7K, you may want to consider claiming more than two allowances on your W-4. This will allow you to receive more income out of your paychecks and you can adjust your withholding without necessarily owing after you file. I suggest claiming one allowance for yourself and an additional allowance for each dependent you plan to claim on your tax return. Also, keep in mind that you can adjust your W-4 whenever you see necessary throughout the year.
Hello,
It looks like we have to pay this year. So I need to adjust w4’s Me and my husband work 2 jobs. But my husband second job in a contractor status. I have extra taken out of my second job but it does not look like it worked this year. Can you help what should out w4 say.
Hi Betty,
Instead of adjusting the additional amount your are withheld from your paychecks, I suggest updating your allowances being claimed. If you lower the amount of allowances, more tax will be withheld to cover taxes owed. Keep in mind that claiming zero allowances will allow your employer to withhold the maximum amount.
I’ve had 25$ withheld every paycheck from both my jobs. Been working both jobs all year. will i get that back when i file for taxes? If so. how?
Hi Zoe,
When you are hired by an employer, you are asked to complete a W-4 along with your other new hire paperwork. On the W-4, you will see that you have the option to claim allowances based on your specific tax situation. Depending on how many allowances you claim, a certain amount of your income is withheld from your paychecks over the tax year. The amount is withheld to pay for the taxes you owe to the IRS and state. If you claim zero allowances, you are allowing the maximum amount of income to be withheld for taxes owed. The more allowances you claim, the less income is withheld from your paychecks. A tax refund will be issued to you after filing your tax return if you have too much withheld from your paychecks throughout the year. You will receive a tax bill after filing your tax return if too little is withheld from your paychecks throughout the year. The IRS allows you a certain amount of leeway when completing your W-4 in the sense that you choose how many allowances you claim. Whether you claim high or low allowances, the IRS will get the tax money by some means either throughout the year or after you file your taxes.
You mentioned that $25 has been withheld from your paychecks for both jobs. Unfortunately, I am unable to provide you with an accurate answer since I do not know the details of your tax situation (ie: income, filing status, etc). In short, you will not receive ALL of the income that was withheld from your paychecks back as a tax refund because you do owe a certain amount to the IRS for taxes. Keep in mind that you can adjust your W-4 when you see necessary if you feel that too much or too little is being withheld.