How to Figure a W-4

Figuring out your W-4 means adjusting how much tax is held from your check.

Withholding too little on your IRS form W-4 can have unpleasant consequences at the end of the tax year, but withholding too much makes your paycheck smaller. The W-4 form tells the IRS how much money to withhold from your paycheck to pay your taxes; withholding the correct amount throughout the year is important for both you and for the IRS. Your withholding allowances determine how much money is held from your pay; the W-4 form and worksheet help you to determine the right amount of withholding allowances for your tax situation.

Instructions

1. Fill in boxes 1, 2, 3 and 4 on the IRS form W-4. These boxes note your name, address, marital status and lets the Internal Revenue Service know whether any discrepancies exist between your current name and the name on your social security card.

2. Look at the section of the form marked "Personal Allowances Worksheet." Enter "1" on line A if no one claims you as a dependent on his tax returns. If you are a minor, living with parents or a student, check with the person who files as the head of your household to determine whether you are being claimed. If someone else claims you, enter "0" on line A -- you cannot claim a withholding allowance here.

3. Enter "1" on line B if you are not married and have one job. You can also enter "1" if you are married and your spouse does not work, if your spouse works but makes less than $1,500 per year or if you have a second job that makes less than $1,500 per year. If none of these situations apply, enter "0" on line B.

4. Enter "1" on line C if you are married. If your spouse works or you have more than one job, you can also choose to enter "0" here. In certain situations, entering "0" prevents you from having too little tax withheld because you won't claim an allowance for your spouse -- fewer allowances claimed means more tax is withheld for your future tax bills.

5. Enter the number of dependents you claim on your tax return on line D. Don't count yourself or your spouse; this line is only for fully dependent household members such as children. If you have no dependents, enter "0" on this line.

6. Enter "1" on line E if your filing status on your tax return is "Head of Household." If you are not married and pay more than 50 percent of the cost of running your household for you and your dependents, you can claim the status of "Head of Household." If you have another filing status, enter "0" here.

7. Enter "1" on line F if you pay more than $1,900 in expenses for child care or dependent care. This counts day care or home care but does not include child support. If you don't pay for child care, enter "0" on line F.

8. Enter the number of allowances for the Child Tax Credit on line G. If you make less than $61,000 ($90,000 if you are married) then enter "2" for each of your first three children and "1" for any additional children. If you make between $61,000 and $84,000 ($90,000 and $119,000 if you are married) then enter "1" for each of your first six children and "1" for any additional children. If you don't have children or aren't claiming the Child Tax Credit, enter "0" on this line.

9. Add the total number of exemptions on line A through G. These are your withholding allowances. Enter this number in box 5 of the W-4 form.

10. Enter any additional amount you'd like withheld in box 6 of the W-4. This amount can be used to cover additional tax expenses.

11. Enter "exempt" in box 7 if you have no tax liability and want no money withheld from your check. You can only choose to enter exempt if you received a refund of all taxes last year and expect the same for the current tax year. If you enter "exempt" and are not exempt from withholding, you will owe taxes at the end of the year.

12. Sign and date the form to complete the W-4.

References

• IRS: Form W-4
• H&R Block: Filling Out Your W-4
• Kiplinger.com: How to Fill out a W-4 Form