The W-4 form has changed. Step 1: Personal information. Step 2: Account for multiple jobs. Step 3: Claim dependents, including children. Step 4: Refine your withholdings. Step 5: Sign and date your W Here are two general strategies:. How to have more taxes taken out of your paycheck. Reduce the number of dependents. How to have less tax taken out of your paycheck. Increase the number of dependents.
Increase the number on line 4 b. How to use a W-4 to owe nothing on a tax return. W-4 calculator. Back to top. Three things to keep in mind when filling out Form W Note if you are exempt from withholding taxes. File a new W-4 form when life changes. You get married or divorced. You work only part of the year.
Get comfortable fiddling with your withholdings. On a similar note Dive even deeper in Taxes. Explore Taxes. The IRS states that if the name you enter on the form is different from the information found on your Social Security card, you will need to contact the Social Security Administration to ensure you receive credit for your earnings.
The second step applies only if you have more than one job at the same time or are married filing jointly and you and your spouse both work. If one of these scenarios applies to you, then you have three options:. If you have dependents, the IRS has a tool that can help you determine who you can claim as a dependent.
Enter this amount in the second blank of the third section. The fourth step, which is optional, accounts for other adjustments you can make. This step has three parts. You can change information on your W-4 as needed. If your household finances change, and you become responsible for paying most of the bills, you can change your status to head of household which entitles you to higher standard deductions resulting in lower tax liability. Some taxpayers might also qualify for exempt status.
If, for example, you had no tax liability for the previous year, or for this year, you can claim exempt status on your W Doing so indicates to your employer to refrain from withholding any of your pay for federal taxes. If you choose this option, you will have to fill out a W-4 form each year by Feb. The information you should put on your W-4 depends on how much you would like taken out of your every paycheck and put toward taxes.
Make sure to complete the Multiple Jobs Worksheet if applicable. Consider submitting extra withholdings in line 4 c or decreasing your number of dependents to ensure you are not greeted with a tax bill at the end of the year. Increasing your withholding will make it more likely that you end up with a refund come tax time.
If you got a large refund last year, or are in a situation where you would rather receive all of your money now and pay your taxes at the end of the year, then consider using the W-4 form to reduce your tax burden. In previous years, W-4 forms included an option to have taxes automatically taken out of your paycheck or not.
This was done by either not claiming an allowance and allowing the full amount of estimated taxes to be taken out of each paycheck by placing a 0 in the appropriate line, or by placing a 1 in the line and then choosing how much you would like withheld from each paycheck. As of , this section of the W-4 is no longer relevant. The form has changed to use a more comprehensive formula for determining tax withholdings. You'll probably have to take the form home and fill it out there, instead of turning it in right away on your first day of work.
Having multiple jobs or a spouse who works can affect the amount of tax withheld from your wages. Tax rates increase as income rises, and only one standard deduction can be claimed on each tax return, regardless of the number of jobs. As a result, if you have more than one job at a time or file a joint return with a working spouse, more money should usually be withheld from the combined pay for all the jobs than would be withheld if each job was considered by itself.
Therefore, adjustments to your withholding must be made to avoid owing additional tax, and maybe penalties, when you file your tax return.
Fortunately, the W-4 form has a section where you can provide information about additional jobs and working spouses so that your withholding can be adjusted accordingly. Step 2 of the form actually lists three different options you can choose from to make the necessary adjustments.
Also note that the IRS recommends completing a W-4 for all your jobs to get the most accurate withholding. By accurate, they mean having total withholding as close to your expected tax liability as possible.
The W-4 form makes it easy to adjust your withholding to account for certain tax credits and deductions. There are clear lines on the W-4 form to add these amounts — you can't miss them. Including credits and deductions on the form will decrease the amount of tax withheld, which in turn increases the amount of your paycheck and reduces any refund you may get when you file your tax return. Workers can factor in the child tax credit and the credit for other dependents in Step 3 of the form.
You can also include estimates for other tax credits in Step 3, such as education tax credits or the foreign tax credit. For deductions, it's important to note that you should only enter deductions other than the basic standard deduction on Line 4 b. So, you can include itemized deductions on this line. If you take the standard deduction, you can also include other deductions, such as those for student loan interest and IRAs.
However, do not include the standard deduction amount itself. It could be "a source of error if folks just put in their full amount," warns Isberg. If you have multiple jobs or a working spouse, complete Step 3 and Line 4 b on only one W-4 form. To get the most accurate withholding, it should be the form for the highest paying job.
You'll also want to use this tool if you expect to work only part of the year, have dividend income or capital gains, are subject to additional taxes e. The IRS tool is also a good option if you have privacy concerns — for example, if you don't want your boss to know you're working two jobs or have other sources of income. The tool will spit out an amount to report as "extra withholding" on Line 4 c for these things, and your employer won't have a clue what it's for.
The tool doesn't ask you to provide sensitive information such as your name, Social Security number, address or bank account numbers, either. Withholding allowances vary from person to person based on a number of circumstances, including:.
The more withholding allowances you claim, the less tax is withheld from your wages. The number of withholding allowances you claim depends on the number of your eligible children and your income. The IRS might ask your employer for your W-4 depending on your number of tax withholding allowances. If you claim more allowances than you have a reasonable basis for, the IRS can penalize you. To help determine how many tax withholding allowances you should claim, it might help to look at your returns or payments from previous years.
If you received a large refund, consider increasing the number of allowances you claim so less tax is withheld. If you paid the IRS a large sum when you filed your return, decrease the number of allowances you claim. You can make much more and still be exempt from withholding if no one can claim you as a dependent.
If you owed no federal tax last year and expect to owe none this year, you might be exempt from withholding. Then, divide those total allowances between you and your spouse.
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