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!
If you are unsure what your liability will come out as or the refund when it comes to filing, it’s best to claim allowances conservatively. The more allowances that you choose to claim, the more likely this will result in a liability. From the situation that you have outlined, going by the W-4 instructions, you only qualify for 2 allowance claims, and if you would like to be more conservative because of the income bracket that you are placed in, you may just only want to claim 1 allowance.
What is the best way to fill out my w4 for myself with two children. I want to get the most I can without having to pay at tax time. My salary pay is $43,500 a year, would like a return but not needed really.
Please take note that the more allowances that you claim on your W-4, the more likely this may result in a tax liability. So claiming as conservatively as possible if you do not know the exact amount to claim on your W-4 would be to your benefit. From the situation that you have outlined, if you are filing for Head of the household as well, the number of allowances you may want to claim would be 4-5.
Hi, my wife and I recently welcomed our first child and she decided to stay home and raise our child instead of returning to work. Since this happened mid-year, I am reviewing my W-4 filing at work and I am not sure what to enter in Line B. While she did work for half the year, she is no longer employed, so can I enter in a 1 for that line?
Up to your discretion, I would advise holding off on claiming any more allowances than you have already. This being dependent on the salary that you are earning, you may end up owing a liability. If however, from last year return you were refunded a substantial amount, it may be safe for you to claim one more allowance, now that your family situation has changed. Please note that the child must reside with you for more than half the year excluding required hospital stay following birth, to be a qualified child on your return.
Thank you! Your response was very helpful. I will hold off on changing Line B for now and wait until next year.
I live in California, married with 3 children. We have been claiming Married and 0 and it seems we always have to pay $2,000 every year. We both make $93k each so our total is $186k combined. We do not own a house, and we have no childcare cost. Does this sound right? Should we be claiming Married and 5?
Hello Steve,
You should claim 5 exemptions on your tax return when filing a joint return. The way you fill out your W-4 is at your discretion. The more allowances, fewer taxes are withheld from each paycheck. This may result in you having a tax liability. On the other hand, fewer allowances, more taxes are withheld from each paycheck where you are more likely to get a refund. You can check with your Payroll Department for further assistance.
Hi,
Married recently and changed my W4 – to 0, however, they are taking out WAY too much taxes. We don’t have any children and planning on filing taxes separately next year.
Please let me know.
Thank you.
Claiming 2 allowances, one for yourself and one for your spouse with the situation that you have indicated should suffice. The fewer number of allowances that you claim the more taxes get withheld. The more allowances you claim the fewer taxes get withheld but may result in a tax liability.