Upon starting a new job, one form you will be required to file is the W-4, also known as the Employee’s Withholding Certificate. It’s one of the most important tax documents you will complete, as it informs your employer of the correct amount of federal taxes to withhold from your paycheck.
How to file a W-4 form in 5 Steps
Step 1: Enter your personal information
The first step is filling out your name, address, and Social Security number. The IRS states that if the name you enter on the form is different from the information found on your Social Security card, you will need to contact the Social Security Administration to ensure you receive credit for your earnings.
For your tax filing status, check only one of the three boxes.
- Single or Married Filing Separately.
- Married filing jointly or Qualifying widow(er).
- Head of household (for taxpayers who are single and pay more than half the costs of keeping up their home for themselves and a qualifying individual).
Step 2: Multiple jobs or spouse works
The second step applies only if you have more than one job at the same time or are married filing jointly and you and your spouse both work. If one of these scenarios applies to you, then you have three options:
- Use the IRS’s Tax Withholding Estimator tool which most accurately calculates the additional tax you need to have withheld. Apply these withholdings in step 4C of your W-4.
- Use the IRS’s Multiple Jobs Worksheet, located on page 3 of the W-4 if you and/or your spouse work either two or three jobs at the same time. After filling out the worksheet, enter this amount into 4C on your W-4.
- If you and/or your spouse work a total of only two jobs, you can simply check the box located at 2C of the form (you must also check the box on the W-4 form of your other job as well). By checking the box, your standard deduction and tax brackets will be cut in half for each job to calculate withholding. According to the IRS, this option is somewhat accurate for jobs with similar pay; otherwise, more tax than necessary may be withheld, and this extra amount will be larger the greater the difference in pay is between the two jobs.
Step 3: Claim dependents
If you have dependents, the IRS has a tool that can help you determine who you can claim as a dependent. You can only claim dependents if your income is under $200,000 or under $400,000 if you are married filing jointly.
If you have children under 17 years of age, multiply the number of children you have by $2,000. If, for example, you have three children under 17, enter $6,000 in the first blank. If you have other qualified dependents, you can multiply the number of them by $500. Enter this amount in the second blank of the third section.
Step 4: Factor in additional income and deductions
The fourth step, which is optional, accounts for other adjustments you can make. There are three parts in this step.
- Other income (not from jobs): You can include other income you receive not related to jobs such as interest, dividends and retirement income.
- Deductions: If you plan to claim itemized deductions (other than standard deductions) to lower your tax liability, fill out the worksheet on page 3.
- Extra withholding: You can withhold additional tax from your paychecks for each pay period, including any amounts from the Multiple Jobs Worksheet. You can designate a specific amount for withholding, like an extra $10 from your paychecks.
Step 5: Sign and file with your employer
Once you’ve reviewed your form and verified that the data you provided is correct, simply sign and date it and return it to your employer.
What to keep in mind when completing your Form W-4
You can change information on your W-4 as needed. If you start a new job and you’re making the same pay, for example, you can check the box on 2C for both of these jobs.
If your household finances change, and you become responsible for paying most of the bills, you can change your status to head of household which entitles you to higher standard deductions resulting in lower tax liability.
What’s more, when you complete your W-4, it doesn’t go to the IRS but instead to your employer who will keep the form on file for at least four years. The IRS, however, reviews withholdings, so it’s important to complete your W-4 form correctly, or you could end up with a higher tax bill.
Some taxpayers might also qualify for exempt status. If, for example, you had no tax liability for the previous year, or for this year, you can claim exempt status on your W-4. Doing so indicates to your employer to refrain from withholding any of your pay for federal taxes. If you choose this option, you will have to fill out a W-4 form each year by Feb. 15 (or by the first business day after if the 15th falls on a weekend) to maintain your exempt status.