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!
Good Evening,
My wife and I are married and fill jointly. We have two children who were adopted. I claim 1 on my w4 and she claims 0. We typically get around $5,000-$6,000 on returns. Would it be smarter if we both claimed 4 on our w4?
Hi Steve,
The IRS allows for a bit of flexibility when it comes to the W-4. This is how it works. If you claim a higher amount of allowances, you will have less income withheld from your paychecks to cover tax to the IRS. Claiming a lower amount of allowances will allow for more income to be withheld from your paychecks each pay period. If too little is withheld over the year, then you will owe the IRS after filing. If too much is withheld, the IRS will issue you a refund. That being said, the Personal Allowances Worksheet is just a guide for you. You are not required to use it or give it to your employer. As of now, your are claiming one allowance while your wife claims zero. Your wife is having the maximum amount withheld from your paychecks and you’re not far behind her. This, along with any credits or deductions you are claiming, is why your refund is up there at $6,000. You and your wife are definitely in the position to increase your allowances if you so choose to. This would provide you both with more take home pay throughout the year. With two children, that may be beneficial! I suggest increasing your allowances and seeing how drastic the difference in federal withholding is for the following pay period. You can update your W-4 at any time with your employer and it will go into effect for the following pay period.
I am recently married and we have just purchased a home. My spouse is a green card holder in the U.S. but is between jobs in his transition. Per the W4 personal allowances worksheet, I can claim 3 allowances – is this correct? Should I claim 3 allowances while he remains unemployed but switch down to 2 allowances once he is working?
Overall, while I would like to bring home more money and still get a refund, my biggest goal is not to owe federal taxes.
Grateful for a steer!
Hi Jai,
Congratulations on tying the knot and the new home!
The IRS actually allows you to adjust your withholding to fit your tax situation at the moment. Although your filing status should be listed as it will be on your tax return, you have a bit more leeway when it comes to how many allowances you claim on your W-4. The more you claim, the less is withheld from your paychecks to cover tax you owe. While this gives you more take-home pay, you could end up owing the IRS after filing for the year if too little was withheld. On the other hand, the less allowances you claim, the more tax is withheld from your paychecks. This could leave you expecting a refund after filing but with less take-home pay throughout the year. If your overall goal is to not owe the IRS after filing for the year, then I would suggest claiming less rather than more allowances.
Hi, I just got married recently. However, I plan to file my tax separately. What should I claim on my W-4?
Hi Van,
Congratulations on tying the knot!
Although you did not provide too much insight into your specific tax situation, I would suggest claiming married with one allowance on your W-4. This is based on the info you DID provide so keep that in mind. If you meet any other qualifications for claiming additional allowances on your Personal Allowances Worksheet, you may want to consider doing so.
Hello,
I work part time at 25hrs a week and my husband works full time at 40+ hrs a week. We have 2 children and we both claim 1 each. So on our w4 form, we both have 4 allowances. But for some reason there isn’t any federal taxes being taken out of our checks. Is this something to be concerned about or is this normal? Are we still entitled to refund at the beginning of the year or will we owe money?
Hi Allison,
There are a few reasons why there may not be federal taxes being withheld from your paychecks.
1–You are claiming too many allowances.
2–You are claiming exempt from withholding in Box 7 on your W-4.
3–Your gross wage for the pay period is too low to trigger any federal income tax to be withheld.
I suggest speaking with your payroll department about this. You can update your W-4 at any time and it will go into immediate effect for the following pay period. Try claiming less allowances for one pay period and see if any tax is withheld. It important to know how allowances work. The more allowances you claim, the less is withheld from your paychecks throughout the year. The less allowances you claim, the more is withheld. If too little is withheld, you will owe the IRS. If too much is withheld, you will be issued a refund.
I have 2 jobs and am married and have two children still at home. Husband works making higher income and claims head of house. Do I claim myself, husband and children as four allowances? Thanks!
Hi Ann,
The ideal scenario is that your W-4 form reflects what your tax return will be filed as. To begin, you mentioned having two jobs. You may want to complete the worksheet on page 2 of your W-4 form. When it comes to claiming allowances for your children, you’ll want to match your tax return. You and your husband should not each be claiming four allowances on both W-4s. Many married filers will split allowances OR the spouse earning more income will claim the majority of allowances while the other claims one or zero.