How to Fill Out a W-4

A properly filled out W-4 form is the first step in tax preparation and it directly affects the size of your income tax bill. However, for many this form can feel overwhelming and confusing. Here are some basic guidelines for filling out the W-4 to maximize your paycheck and your tax return.

A W-4 form is an IRS document filled out by anyone that is employed and receives payroll income. It is usually filled out when someone is newly employed, or when they need to change information regarding their paycheck. The form tells the employer how much of your paycheck should be withheld for taxes. The IRS wants you to pay your taxes “as you go” instead of waiting until you file your annual tax return to pay. The W-4 allows that to happen.

One of the first questions is “Am I exempt?” This asks if you are exempt from paying taxes. The answer to this is question is that you probably are not exempt. However, if you think you will earn very little money, and therefore don’t expect to owe income taxes, you may qualify.

Following the exemption question there are three worksheets to address:

  • Personal Allowances
  • Deductions and Adjustments
  • Two-Earners/Multiple Jobs (for people with more than one job or married people in which both work).

Personal Allowances Worksheet

The Personal Allowances worksheet is for everyone. The Personal Allowances represent your deductions. The more deductions you claim, the less money will be withheld from your paycheck. Follow the directions entering in numbers in boxes A-D. Box B and C give you options for entering numbers. Box D asks for the number of dependents. Sometimes we don’t know exactly what our tax situation might be like, and it is difficult to know what number to enter. Remember that each allowance claimed affects the amount withheld from your paychecks. You will receive a tax refund if you don’t claim enough allowances and therefore overpay your taxes throughout the year. If you claim too many allowances you may owe the IRS money on your income taxes. If you owe more than $1,000 you also have to pay a penalty. Make your best estimate for accuracy and remember that the allowances can be adjusted later as needed.

Some examples might be:

Single, one job, no dependents: SINGLE, ONE ALLOWANCE

High school or college student, single, claimed by your parents on their taxes: SINGLE, NO ALLOWANCES

Married, three children, spouse does not work: MARRIED, 5 ALLOWANCES

Deductions and Adjustments Worksheet

The Deductions and Adjustments worksheet is only for those who expect to have deductions for the year that will lower their taxable income. This can help to ensure that there is not excess withholdings. The worksheet can seem complicated, so the IRS has an online calculator that can help you determine what to enter at  

Two-Earners Worksheet

The Two-Earners worksheet is for households with more than one income. The extra income may push you into a higher tax bracket, so the IRS wants to ensure you have enough withheld to avoid the penalties.

Final Steps

When you have finished with the worksheets, you will fill out the informational portion of the W-4 that includes the standard name, address, social security number and tax filing status. You will then enter in the totals from your worksheets. From there, you will give the form to your employer and get to work! If the W-4 is filled out accurately, you won’t owe any additional tax when you file your return (and you may not receive a refund either). Update your W-4 with your employer whenever life events change your situation, such as marriage, childbirth, child leaving the nest, etc.  Always consult a qualified tax advisor with questions.