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. Make sure your name is as it appears on your Social Security card. 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. This step has three parts.
- 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.
FAQ about filling out Form W-4
Here are some frequently asked questions about filling out Form W-4.
What should you put on your W-4?
The information you should put on your W-4 depends on how much you would like taken out of your every paycheck and put toward taxes. If you would like to avoid owing taxes at the end of the and potentially racking up a large tax bill, you should use the IRS’ Tax Withholding Estimator tool to determine how much you should have withheld from each paycheck. Make sure to complete the Multiple Jobs Worksheet if applicable. Consider submitting extra withholdings in line 4(c) or decreasing your number of dependents to ensure you are not greeted with a tax bill at the end of the year. Increasing your withholding will make it more likely that you end up with a refund come tax time.
If you got a large refund last year, or are in a situation where you would rather receive all of your money now and pay your taxes at the end of the year, then consider using the W-4 form to reduce your tax burden. You can reduce the amount of taxes taken out of your paycheck by increasing your dependents, reducing the amount of “non-job” income or untaxed income that you are accounting for in your withholding in lines 4(a) or 4(c), or increasing the figure for itemized deductions in line 4(b).
Do you claim 0 or 1 on your W-4?
In previous years, W-4 forms included an option to have taxes automatically taken out of your paycheck or not. This was done by either not claiming an allowance and allowing the full amount of estimated taxes to be taken out of each paycheck by placing a 0 in the appropriate line, or by placing a 1 in the line and then choosing how much you would like withheld from each paycheck.
As of 2021, this section of the W-4 is no longer relevant. The form has changed to use a more comprehensive formula for determining tax withholdings. A W-4 with the 0 or 1 question indicates that your employer is using an outdated W-4 form. However, you can still fill out this form if requested. A 0 will result in more taxes being withheld from each paycheck, while 1 will allow you to take home more money if you choose — though it may result in a tax bill at the end of the year if you withhold too much.
What do you put on W-4 if no taxes are taken out?
In order to qualify for exempt status, you will need to have no tax liability from the previous year and expect to have no tax liability for the current year. If you meet these qualifications, you can inform your employer not to withhold federal income tax from your paycheck by writing “EXEMPT” in line 4(c).
Your employer will still withhold Social Security and Medicare taxes regardless of your exempt status. Also, your exemption will only last for one year. You will have to file a new W-4 claiming exempt status by Feb. 15 of a given year in order to maintain that status.
How do you have more taxes taken out of your paycheck?
In order to have more taxes taken out of your paycheck, indicate on the W-4 that you would like to have your employer withhold more money or update the form with new information that will result in more money being withheld. This can be done by indicating that you have fewer dependents than you did on a previous W-4 filing. You can also submit more withholdings in line 4(c), which will indicate to your employer that you would like them to withhold more than they currently are.
How do you have less tax taken out of your paycheck?
You can use the W-4 form to reduce your tax burden, as well. To do this, decrease the figure that affects your withholdings. That includes additional withholdings indicated in line 4(c), as well as non-job related income identified in form 4(a). You can also submit a new W-4 if you have a new dependent, which will reduce your withholdings.