When you start a new job — or change your name or marital status — you will probably have to fill out a new W-4 tax form. Your completed form is used to determine how much of your income your employer should withhold for federal taxes, so it’s important to take the time to fill it out carefully and completely to avoid a massive bill each tax season.
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Do you know how to fill out a W-4 form? If you need a full rundown, keep reading for a simple step-by-step breakdown.
The Basics: What Is a W-4 Form?
The W-4 form — which is an Employee’s Withholding Allowance Certificate — is a document 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.
In fact, the IRS recommends filling out a new W-4 form every year.
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
These worksheets help guide you to the best answer to the question, “What should be claimed on a W-4?”
Note that the IRS designed a new form in 2020, but it is unchanged for 2021. You can download a copy of the 2021 W-4 form (with all of the worksheets included) on the IRS website. The best way to fill out a W-4 is to start with the worksheets on page 3, which will guide you through the application form.
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 you want to increase or decrease your amount withheld, you will need to fill out the new W-4 form.
It’s always a good idea to review your withholdings, so contact your HR representative if you have questions.
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Steps 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.
Step 1: Fill Out the Multiple Jobs Worksheet (If Applicable)
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 the 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 underwithheld come year-end.”
To fill out this worksheet, you might need to refer to the tables on Page 4.
Keep reading for step-by-step instructions on how to fill out the Multiple Jobs Worksheet.
1. Line 1 should be filled 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.
2. If you and/or your spouse have three jobs at the same time, you’ll fill out lines 2a, 2b and 2c.
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 for a total value in 2c.
If this is not relevant to you, skip to line 3.
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. Put the number on line 3.
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.
Enter it again in Step 4(c) for the highest paying job, and include any additional amount you want to be withheld.
Step 2: Fill Out the Deductions Worksheet (If Applicable)
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.
If you do fill out this worksheet, follow these steps:
1. Put the estimated amount of your 2020 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
2. Then amount you enter on line 2 will depend on your filing status:
- Enter “$25,100” if you are married filing jointly or a qualified widow(er).
- Enter “$18,800” if you are head of household.
- Enter “$12,550” if you are single or married filing separately.
3. Subtract line 2 from line 1, and put this number on line 3.
If the number is zero or less, just put “0.”
4. Use line 4 to record an estimate of your student loan interest, deductible individual retirement account contributions, and other income adjustments from Schedule 1.
The following qualify as adjustments to income:
- Educator expenses
- Certain business expenses of reservists, performing artists and fee-basis government officials
- Health savings account deduction
- Moving expenses for members of the Armed Forces
- Deductible part of self-employment tax
- Self-employed SEP, SIMPLE and qualified plans
- Self-employed health insurance deduction
- Penalty on early withdrawal of savings
- Alimony paid
- IRA deduction
- Student loan interest deduction
- Tuition and fees deduction
5. Add lines 3 and 4, and enter the total on line 5.
Again, always remember to double-check your math when adding up amounts on your W-4.
Step 3: Complete the Employee’s Tax Withholding Certificate (All Taxpayers)
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. (Note: You cannot fill out a W-4 online because you must submit it to your employer.)
- Fill out 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 today’s date. Give the form to your employer to fill out the Employers Only field.
Need To Know: W-4 Form FAQs
You might still need clarification on topics other than how to complete a W-4. Here are answers to some frequently asked questions:
1. 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 Form W-2 when filing your taxes.
2. What should one do if earning money from two jobs?
When you have income from two jobs, you only need to complete one W-4 form.
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3. How does one know if an employer is withholding too much from a paycheck?
Once your W-4 form takes effect, you can use the IRS withholding calculator on IRS.gov or reference Pub. 505 to see whether the amount being withheld is comparable to the projected total tax for the year.
4. Will the amount of money earned from investments and dividends affect the W-4?
The IRS classifies investments and dividends as nonwage income. When you are earning a significant amount of nonwage income, you can make estimated tax payments using Form 1040-ES to avoid owing additional tax when tax season rolls around.
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5. 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.
6. How does the W-4 form affect net pay?
Your employer deducts your tax withholdings based on your W-4 form.
7. Is it better to have more earned income withheld to be on the safe side?
The best thing to do is to carefully take the time to fill out the W-4 worksheets and form to ensure the appropriate withholding amount.
“If you’d rather have more net pay now and deal with the possibility of having to pay higher taxes when filing your tax return, you can do that,” said Bill Weekes-Ruesch, MBA, CPA. “Or, you can choose to have more taxes withheld as you go, resulting in either a larger tax refund or lower tax liability when filing your return.”
8. What are the downsides to having more tax withheld and getting a larger refund at the end of the year?
It may seem nice to get a big tax refund in the mail when you claim exemption from withholding on your W-4 tax form, but you’ll wish you had access to those funds earlier if you need them for an emergency or any unforeseen expense. You’re likely better off having the money that’s rightfully yours in a savings account or other fund than with the IRS, so you can access that money on your own terms.
Fill Out Your W-4 Form Correctly To Avoid a Massive Tax Bill
Do you feel more confident about filling out the W-4 after reading through these steps? Hopefully, this guide and toolkit will help you through the process of filling out your W-4 form. Whether this is the first time you have filled out a W-4 or if you have filled out several over the course of your career, it is always good to have a refresher in order to understand what is happening with your earned pay at every step.
Remember to take your time, read through everything, and gather any documentation you may need to make sure you fill out everything correctly for your tax paperwork.
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