How To Fill Out Form W-4

A Step-by-Step Guide to Form W-4

The Balance

You see it with every paycheck and it probably makes you wince—your net income is whittled away as your employer takes federal and state taxes out of your gross pay and leaves you with the rest. He withholds the money, then sends it to the government on your behalf In the case of Social Security and Medicare, he matches the percentage you pay in. 

So how does your employer know just how much to withhold? You tell him when you fill out Form W-4.

Form W-4 

Tax forms aren't generally considered to be good things, but Form W-4 at least gives you control over your tax situation and how much of your pay you take home.

Form W-4 tells your employer how many allowances you want to claim. These allowances adjust the portion of your income that's subject to federal income tax. They represent portions of your income from which no tax is deducted on your paychecks.

The more allowances you claim, the greater your take home pay will be. The less you claim, the more will be deducted from your pay for taxes each pay period.

You're asked to fill out one of these forms whenever you first start a new job, and you can also submit a new W-4 at any time during the course of your employment if you want to change your withholding allowances.

The IRS recommends updating your W-4 when you experience life changes such as:

  • Marriage
  • Divorce
  • A home purchase
  • The birth or adoption of a child
  • Taking on a second job

You're not limited to these events, however. You can change your W-4 simply because you've realized that you got it wrong last year, or because you want more or less withheld for other personal reasons.

Where to Get the Form

Your employer should give you a Form W-4 to complete when you first begin working for him, but you can download one from the IRS website if you want to make changes and he doesn't happen to have the form on hand.

It's in PDF format. You can type your information directly into the document then print it out, or you can print out a blank copy and fill it in by hand if you want to do things the good, old-fashioned way. It's recommended that you keep a copy on your computer, or at least in a paper file.

Save a copy to your hard drive when the PDF loads on your Web browser, then open the downloaded file and type in your information that way. You can save the finished draft after you've filled it out.  

The Worksheets 

Look over the pages of the form to familiarize yourself with it. There are some brief instructions on the first page, followed by the form itself. More instructions appear on the second page, followed by a Personal Allowances worksheet and the Deductions, Adjustments and Additional Income worksheet. Finally, there's a Two-Earners/Multiple Jobs worksheet with two related tables. 

All these worksheets help you figure out what you should enter on the form. 

Personal Allowances vs. Personal Exemptions

Personal allowances are not the same as the personal exemptions you used to be able to claim on your tax return for yourself, your spouse, and each of your dependents. The Tax Cuts and Jobs Act did away with personal exemptions when it went into effect in January 2018, although it did double the amounts of standard deductions to compensate, at least for single filers and smaller families.

Calculating Your Personal Allowances

Start with the Personal Allowances worksheet and complete lines A through H. The questions relate to the current tax year, and they're pretty black and white. How many dependents do you have? Will you be filing your taxes as head of household?

You might think you're head of your household because you're the family's primary breadwinner, but IRS rules don't work like that. Head of household filers cannot be married, must have a qualifying dependent, and must personally pay for more than half the costs of maintaining your home for the year.

The Personal Allowances worksheet also asks you about any tax credits that you might be eligible to claim that can have a significant impact on your tax liability at the end of the year. Credits can influence how much should be withheld from your paycheck. The whole idea behind Form W-4 is matching your withholding to what you'll owe in taxes at the end of the tax year.

You can simply transfer the resulting number on line H of the worksheet to line 5 of the W-4 if you anticipate taking the standard deduction with no other deductions when you file your return.

Will You Have Other Income? 

If you anticipate that you'll also have unearned income or self-employment income, or if you think you'll claim adjustments to income or that you might itemize your deductions, continue on to the Deductions, Adjustments and Additional Income worksheet. 

Work through lines 1 through 10. You might need the help of some of the worksheets found in IRS Publication 505, "Tax Withholding and Estimated Tax", to complete some of these calculations.

You can also refer to your tax return from the previous year to help you estimate non-wage income, adjustments to income, or itemized deductions.

Are You Married or Do You Have More Than One Job? 

The Two-Earners/Multiple Jobs worksheet is for unmarried persons with more than one job, and for married couples who both work and who plan to file jointly. Complete lines 1 through 9 of this worksheet. You might have to refer to the tables that appear below it for help. 

Cross-Check Your Results 

Now you should have a number that represents your withholding allowances. You can cross-check this number if you want to see if it provides for the right amount of withholding for you.

Start with the exact amount of money that will be withheld every pay period using the withholding allowances you just calculated. You might have to use an online payroll calculator and you'll need a current pay stub. 

Figure out how much federal income tax will be withheld using the payroll calculator and the withholding allowances you just calculated. Now multiply that number by the remaining pay periods in the year and add in how much federal tax has been withheld from your pay so far this year. The result is your expected federal tax withholding for the year.

Calculate Your Expected Tax Liability for the Year 

Compare your expected federal tax withholding to your expected tax liability for the full year. You can calculate this by using worksheets found in Publication 505. It's also typically available in the tax-planning feature of tax software programs.

Now you can figure out if your withholding for the year will be more than your tax liability—which will result in a refund—or less than your tax liability, which means you'll owe a balance to the IRS. You can adjust your withholding up or down to bring your expected refund or balance due within a range that's acceptable to you.

You might prefer not to wait for that refund but have the difference appear in your paychecks instead, or you might want to pay more taxes per pay period than you have to just to be on the safe side come filing time.

You could find yourself facing an unexpected tax bill at year's end if insufficient money is withheld from your pay. 

Give the Form to Your Employer 

Fill out the rest of the Form W-4 and give it to your employer. If you're starting a new job, he'll use this information to calculate the tax withholding on your first paycheck.

If you're submitting a revised Form W-4, your employer should make the changes as soon as possible. Technically, the deadline is the start of the first payroll period that ends 30 or more days after you turn in the W-4.

Don't neglect to review your paycheck after your withholding allowances go into effect. Remember, you're trying to achieve that perfect balance between withholding enough so you don't have a tax liability at the end of the year and still having enough take-home pay to live comfortably. 

If You're a Nonresident Alien 

There's a special procedure for filling out Form W-4 if you're a nonresident alien. Refer to the Special Instructions for Form W-4 for Nonresident Alien Employees on the IRS website, or ask a tax professional for assistance. 

Article Sources

  1. Internal Revenue Service. "Tax Withholding for Individuals," Accessed Nov. 15, 2019.

  2. Internal Revenue Service "Publication 501 (2018), Dependents, Standard Deduction, and Filing Information," Head of Household, Accessed Nov. 15, 2019.