How To Fill Out Form W-4

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

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You see it with every paycheck – your net income is whittled away as your employer takes federal and state taxes out of your gross pay. He withholds taxes then sends the money to the government on your behalf.

So how does your employer know how much to withhold? You tell him. Among other things, Form W-4 tells your employer how many allowances you want to claim. It allows you a degree of control over how much of your income you want withheld based on the allowances you claim.

These allowances adjust the portion of your income that is subject to federal income tax.

You'll be asked to fill out a Form W-4 when you first start a job. Employees also can submit a new Form W-4 at any time during the course of their employment if they want to change their withholding allowances. 

Difficulty: Average

Time Required: 10 to 50 minutes

Here's How:

  1. Download Form W-4 from the IRS Web site. It's in a PDF format and you can type your information directly onto the document on your computer then print it out. But it’s a good idea to keep a copy of your most recent Form W-4 on your computer for future use. Use the save button to save a copy of the file to your hard drive when the PDF loads on your Web browser, then open the downloaded file and type in your information. You can resave the finished draft after you've filled it out.  
  2. Look over the two pages of the form to familiarize yourself with it. There are some brief instructions on the first page followed by a Personal Allowances worksheet, then the actual Form W-4 that you'll give to your employer. There are two more worksheets on the second page: the Deductions and Adjustments worksheet and the Two-Earners/Multiple Jobs worksheet. At the end of the second page, below these worksheets, are two tables which relate to the Two-Earners/Multiple Jobs worksheet.
  1. Start with the Personal Allowances worksheet on the first page, completing lines A through H. The questions asked on these worksheets 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? This worksheet also asks you about some tax credits you might be eligible to take, which can have a significant impact on your tax liability at the end of the year and, by extension, how much should be withheld from your paycheck. If you anticipate taking the standard deduction and personal exemptions only with no other deductions, you can transfer the resulting number on Line H to Line 5 of the W-4 and skip ahead to Step 7 below. 
  1. If you anticipate that you'll have a significant amount of income other than wages from this employer, and/or you think you'll claim adjustments to income or itemize your deductions, continue on to the Deductions and Adjustments worksheet. Otherwise, move ahead to the Two-Earners/Multiple Jobs worksheet explained in Step 6. 
  2. Work through lines 1 through 10 of the Deductions and Adjustments worksheet. You may need the help of some worksheets found in IRS Publication 505, Tax Withholding and Estimated Tax, to complete some calculations. You may also need to refer to your tax return from the previous year to help you estimate non-wage income, adjustments to income or itemized deductions.
  3. The Two-Earners/Multiple Jobs worksheet is used for unmarried persons with more than one job and for married couples who plan to file jointly and they have two or more jobs between them. Work through lines 1 through 9 of this worksheet. You may have to refer to the tables below it for help. 
  4. You now have a number that represents your withholding allowances. If you want, you can cross-check this number 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 may have to use an online payroll calculator. You'll need a current paystub. 
  1. Using the payroll calculator, figure out how much federal income tax will be withheld using the withholding allowances you just calculated. Then multiply that number by the remaining pay periods in the year and add in how much federal tax has been withheld year-to-date. The result is your expected federal tax withholding for the year. Compare this number to your expected tax liability for the full year, which you'll have to calculate as well.
  2. You can calculate your expected tax liability by using worksheets in Publication 505 or the tax planning feature of your tax software. By comparing your withholding for the year to your tax liability for the year, you can figure out if your withholding will be more than your tax liability – which will result in a refund – or less than your tax liability so you'll owe a balance to the IRS. Now you can adjust your withholding up or down to bring your expected refund or balance due within a range that is acceptable to you.
  1. Fill out the rest of the Form W-4 and give it to your employer. If you're starting a new job, your employer will use this information to calculate your tax withholding on your first paycheck. If you are submitting a revised Form W-4, your employer should make the changes as soon as possible and practical. Technically, the deadline is the start of the first payroll period that ends 30 or more days after you turn in the W-4. 

Tips: Try using the withholding calculator on the IRS website if this all leaves you feeling a bit overwhelmed, or use it in conjunction with these steps.

And don't neglect to review your paycheck after your withholding allowances go into effect. 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. 

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