How to Fill Out a W-4

When taxpayers report smaller refunds, more often than not, they can be credited to an outdated Form W-4. Unbeknownst to some, a W-4 needs to be updated whenever certain life changes occur. If it’s outdated, you may not have enough tax withheld during the year. This basically results in a smaller refund at tax time. However, since the 2020 changes to the W-4 form, there has still been some confusion about how to properly complete the form. Here’s a breakdown of how to fill out a W-4.  

What is a W-4? 

Formally known as the Employee’s Withholding Certificate, a W-4 is an IRS tax form that helps employers calculate how much tax to withhold from an employee’s paycheck. The IRS requires employers to withhold taxes throughout the year, and the W-4 helps calculate this amount based on factors like your filing status, the number of dependents you claim, and any additional income or deductions you want to consider. This form is most commonly filled out by an employee upon starting a new job. However, it can be submitted at any time of the year. An accurate W-4 will help you avoid overpaying or underpaying your taxes during the year.   

When Should I Fill Out a W-4? 

You should fill out a W-4 each time you start a new job. This is true even when the new job is a second job or gig work. This basically means you will have multiple W-4s if you have multiple jobs. You should also fill out a new W-4 when you experience a life change that can trigger a tax liability. For example, getting married or divorced should result in a new W-4 being submitted to your employer. Having a child, claiming a new dependent or removing a dependent are other scenarios in which you might want to adjust your withholding.  

How To Fill Out a W-4 

Step 1: Fill in your personal information.

First, you’ll enter your personal information, such as your full name, address, Social Security number (SSN), and tax-filing status. Your tax-filing status is very important here as it will determine which tax credits and deductions you might qualify for during tax time. Technically, you can stop at this step and sign the W-4. Your employer will withhold at a default rate. However, this may not result in the right balance of a decent-sized paycheck and tax refund. If you have more than one job, or if both you and your spouse work, consider completing Steps 2 through 4 for a more accurate withholding. 

Step 2: Determine your withholding.

For most, this is the trickiest section of the W-4. If you need clarification, you should seek help from your Human Resources department at work. Here you’ll need to choose your tax withholding according to the number of jobs and combined income you have, including self-employment. This also includes your spouse if you file jointly. 

• If you have multiple jobs, the W-4 for the highest paying job should have Steps 2 through 4(b) filled out. The W-4s for all other jobs can have Steps 2 through 4(b) blank. This will ensure accurate tax withholding. 
• If you have multiple jobs, and the earnings for both are roughly equal, you can choose to check box 2(c). You will need to make sure the W-4s for both jobs have this box checked.  
• If you want to omit the fact that you have a second job, you can choose to withhold a certain amount of tax from your paycheck on line 4(c). If you do not want to have additional tax withheld, you can opt to make estimated payments to the IRS instead. 

Step 3: Add your dependents.

If you earn under $200,000, or $400,000 for married couples filing jointly, you can claim your dependents by following Step 3 on the W-4. If you are filing jointly, make sure only one of you claims these child-related tax credits through withholding. Claiming credits on both forms can result in too little tax will be withheld, and you could have a tax bill at tax time. In general, it is recommended that the highest-earning job claims the child-related tax credits on Form W-4. Taxpayers should note that they are not required to claim dependents here if they would rather have more taxes withheld from their paychecks to reduce their tax bill.  

If you’re eligible, multiply the number of qualifying children under age 17 by $2,000. Then multiply the number of other dependents by $500. Add up these amounts and write the total in Step 3. For example, if you have two children under 17, you’d enter $4,000. If you also have a dependent parent who qualifies, add $500, making the total $4,500. 

Step 4: Make other adjustments.

Here you will make other adjustments, including other income you receive outside of work, deductions other than the standard deduction, and extra withholding. You might want extra tax withholding if you are self-employed and want taxes withheld from these earnings.   

Step 5: Sign the W-4 and submit to HR.

Sign and date the complete W-4. This step is required for the form to be accepted. Once completed, give the form to your employer, not the IRS. 

Additional Help With a W-4 

These steps should help you successfully fill out a W-4, resulting in the appropriate amount of tax withheld from your earnings. Some taxpayers might be interested in altering their W-4 in order to have more taxes taken out of their paycheck to receive a larger tax refund at tax time. To do this, you can reduce the number of dependents on your W-4 or add extra withholding on line 4(c). Alternatively, if you want fewer taxes withheld, you can increase the number of dependents, reduce the number on line 4(a) or 4(c), or increase the number on line 4(b). Beware though, as this can result in a tax bill at tax time.

Taxpayers should always ensure that they are adjusting their W-4 when necessary to avoid unwelcome surprises at tax time. If you need tax help, Optima Tax Relief and our team of knowledgeable tax professionals are here to assist you. 

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