It is after the holidays but before spring cleaning which can mean only one thing, tax time is upon you. Gather up your forms and get out your calculator, it is time to figure out exactly what your tax situation is this year. The amount of taxes you either owe or are due is directly attributed to the information on your W-4 form.
What Is a W-4 Form?
The W-4 form is an Employee’s Withholding Allowance Certificate designed to let your employer know how much of your income to withhold for federal taxes. You should fill out a new W-4 when you have started a new job, if your personal situation changes or if you want to adjust the amount withheld.
The form includes the following fields:
- Social Security number
- Marital status
- Any additional amount you want to be withheld for each paycheck
- Whether you are claiming exemption from withholding
- Your employer’s name and address
- Your first date of employment
- Your employer identification number
To help you determine what to claim on a W-4 and the amount to withhold from your paycheck, the IRS provides you with two worksheets:
- Multiple Jobs Worksheet — Step 2(b) on page 3
- Deductions Worksheet — Step 4(b) on page 3
If you already have a W-4 on file for your existing job, you do not need to change anything yet. However, if you started a new job recently, plan to make any personal life status adjustments, or want to increase or decrease your amount withheld, you will need to fill out the new W-4 form.
How To Fill Out a W-4
Your W-4 form will display several distinct sections for you to fill out. Be sure to only fill out sections that are relevant to your work and life in the previous year. Follow the steps below to complete your W-4 form with confidence when applicable.
- Fill out the Multiple Jobs Worksheet.
- Fill Out the Deductions Worksheet.
- Complete the Employee’s Tax Withholding Certificate.
1. Fill Out the Multiple Jobs Worksheet
If you have more than one job at a time or are married filing jointly and have a working spouse, you should fill out the Multiple Jobs Worksheet.
“Since your multiple employers don’t withhold taxes based on your total salary, the easiest thing to do is to withhold at a higher rate,” said Audrey Goetz, a certified public accountant, certified valuation analyst and manager at the accounting firm Rudler, PSC. “This makes sense if you have, say, two $25,000-a-year jobs. Both employers will withhold based on individual incomes of $25,000. However, that does not take into account that you have two jobs that produce $50,000 of income, and you could end up under-withheld come year-end.”
- Line 1: Fill out if you have two jobs, or you are married filing jointly and both employed. Use the “Higher Paying Job” row and “Lower Paying Job” column from the table on page 4 of your W-4 to find the value at the intersection of your two salaries. Enter that number here.
- Lines 2a, 2b, 2c: Fill out lines 2a, 2b and 2c if you and/or your spouse have three jobs at the same time.
- For 2a, use the table on page 4. Use the highest-paying job’s wages on your list for the “Higher Paying Job” row, and the annual wages for the next highest-paying job in the “Lower Paying Job” column. Find the intersection of those two salaries and enter the number under 2a.
- For 2b, add the value for the two jobs that have the highest annual wages. Use that total when reviewing the “Higher Paying Job” row. Use the lowest-paying job in the “Lower Paying Job” column to find the amount from the appropriate table on page 4.
- Add 2a and 2b together to find the total value for 2c.
- If this is not relevant to you, skip to line 3.
- Line 3: Using the highest-paying job, enter the number of yearly pay periods. For jobs that pay weekly, enter 52; for jobs that pay every other week, enter 26; and for jobs that pay monthly, enter 12.
- Line 4: Divide the annual amount on line 1 or line 2c by the number of pay periods from line 3 and enter the amount here.
2. Fill Out the Deductions Worksheet
Complete the Deductions Worksheet only if you plan to itemize your deductions or claim certain credits on your income tax return. You won’t need to do this if you plan on claiming a standard deduction on your income tax return.
- Put the estimated amount of your 2023 itemized deductions on line 1. This number can include:
- Medical expenses that are more than 7.5% of your income
- State and local income taxes up to $10,000
- Deductible home mortgage interest
- Investment interest
- Charitable contributions
- Casualty and theft losses attributable to a federally declared disaster that are more than $100 and 10% of your adjusted gross income.
- The amount you enter on line 2 will depend on your filing status:
- Enter “$27,700” if you are married filing jointly or a qualified widow(er).
- Enter “$20,800” if you are head of household.
- Enter “$13,850” if you are single or married filing separately.
- Subtract line 2 from line 1, and put this number on line 3.
- If the number is zero or less, just put “0.”
- Use line 4 to record an estimate of your student loan interest, deductible individual retirement account contributions and other income adjustments from Schedule 1, including but not limited to educator expenses, health savings account deduction, moving expenses for members of the Armed Forces, student loan interest deduction or tuition and fees deduction.
- Add lines 3 and 4, and enter the total on line 5.
3. Complete the Employee’s Tax Withholding Certificate
Once you have completed any applicable worksheets, you can begin filling out the W-4 form with your tax withholding choices that you will give to your employer.
- Fill out the Step 1 fields with your personal information.
- Complete Steps 2-4 if they apply to you. Step 2 is if you have multiple jobs or your spouse works, Step 3 is for claiming dependents and Step 4 is for other optional adjustments.
- If you fill out Step 2, check box c if you have one job and your spouse has one job. If there are more than two jobs, use the Multiple Jobs Worksheet on page 3 or the estimator to ensure you are withholding enough.
- If you fill out Step 3, multiply the number of children under age 17 by $2,000 and put the amount on the line. For all other dependents, multiply the number by $500 and put it on the second line. Add both amounts and put the total on line 3.
- Step 4 is optional. Fill it out only if there is other taxable income — not from jobs — if you have other deductions or if you want to claim extra withholding tax each pay period.
- For Step 5, sign your name and provide the date. After you sign and date the form, give it to your employer to fill out the Employers Only field.
What’s the Difference Between a W-4 and a W-2?
A W-4 is the IRS tax form you fill out upon employment, so your employer will withhold your desired amount of federal income tax from your paycheck. A W-2 is the IRS tax form you receive from your employer at the end of the tax year. It includes information on how much money you earned, how much money was withheld for federal and state taxes, and other contributions made to Social Security and your employer-sponsored 401(k) account. You’ll use the W-2 form when filing your taxes.
Filling out your W-4 form correctly can help you to avoid a massive tax bill. Remember to take your time, read through everything and gather any documentation you may need to make sure everything is correct for your tax paperwork.
FAQHere are the answers to some of the most frequently asked questions regarding W-4 forms.
- Do I claim zero or one on my W-4?
- The difference between claiming zero or one is in the withholding amounts. By claiming zero, you are indicating that you want the most amount of tax taken out of your pay each pay period. Claiming one for yourself will mean less tax is taken out of your pay each pay period, so it is a matter of preference and how you would like to budget.
- Will the amount of money earned from investments and dividends affect the W-4?
- The IRS classifies investments and dividends as non-wage income. When you are earning a significant amount of non-wage income, you can make estimated tax payments using form 1040-ES to avoid owing additional tax when tax season rolls around.
- How many allowances can be claimed on a W-4 form?
- Since the IRS made changes to and redesigned the W-4 form, personal allowances no longer need to be included for 2020 and forward.
Gabrielle Olya contributed to the reporting for this article.
Information is accurate as of Feb. 6, 2023.