A W-4 form is a tax form that helps your employer withhold the correct amount of federal income tax from your paycheck, based on information you provide.
You’re required to fill out an initial form W-4 when you start a new job. The Internal Revenue Service recommends submitting an updated form annually or when you have any personal or financial changes to report. Here’s what you need to know about the W-4, one of the most commonly used tax forms.
How to Fill in Form W-4
Fill out the Personal Allowance Worksheet and Employee’s Withholding Allowance Certification on the W-4 form, indicating whether you have a spouse and/or dependents. The worksheet also includes other information on situations that could affect your withholding, such as child or dependent care expenses.
See More: How to Fill Out a W-4
Form W-4 Deductions and Adjustments Worksheet
You only need to use the Deductions and Adjustments Worksheet if you plan to itemize deductions on your IRS tax forms or claim specific adjustments or credits to your income, such as:
- State and local taxes
- Qualifying home mortgage interest
- Deductions to charities
- Medical expenses that were over 10 percent of your income
Form W-4 Two Earners and Multiple Jobs Worksheet
On the second page of form W-4, the Two Earners/Multiple Jobs Worksheet applies to people who have more than one job or a working spouse. The IRS advises claiming all your allowances on the W-4 form for the highest paying job and claiming zero allowances for the others. This worksheet has a table and instructions to help you figure out the best way to handle the situation.
Learn: Do You Know What’s Being Deducted From Your Paycheck?
Making Changes and Corrections to Your W-4
You’re allowed to amend your IRS tax forms. Doing this gives you an opportunity to correct your federal income tax forms and pay any additional amount you should have paid initially, or to get a higher refund. Search IRS forms online and choose Form 1040X to make the corrections. If you owe more money that should have been paid when you filed the original income tax return, pay it promptly to stop the accrual of interest charges.
Consider changing your W-4 form for the following reasons:
- You have a change in marital status.
- You give birth to or adopt a child and need to claim an additional dependent allowance.
- You change or lose your job. If you find a new job, it’s often wise to increase the withholding amount to your new W-4 form to balance things out.
- You get a raise or promotion.
Important Notes on Form W-4 Withholding
The information on your W-4 form directly affects the amount of your tax withholding. Keep the following details in mind when filling out or updating your W-4:
- Your employer withholds less money from your paycheck if you claim more allowances.
- You have to pay the IRS in a lump sum if too little is withheld.
- Voluntarily raising the amount withheld avoids payments.
If you had no tax liability in the prior year and expect that circumstance to continue, you can declare yourself exempt from withholding on your W-4 form. This typically happens if your income is low enough for your personal exemption and standard deduction to wipe out the taxes.
Rather than trying to calculate the proper amount of allowances manually, use the IRS’s online withholding calculator to make a more accurate decision for your tax forms. Prepare to use the calculator by gathering your most recent income tax return and paycheck stub.
Also See: What Is a W-2 Form?
