How to Choose the Number of W-4 Allowances

No matter how unpleasant the thought, taxes are a part of life. As a result, every employee has to complete a W-4 tax withholding form when he starts a new job. Here's how to choose the number of deductions to claim on your W-4 form.

Difficulty: Moderately Easy

Instructions

1. Obtain a copy of Form W-4. The proper name for the form is Employee's Withholding Allowance Certificate. Your employer will provide you with a copy of the form. If not, download it from the IRS website.

2. Complete the demographic information. Insert your name, address, social security number and marital status.

3. Calculate the total number of exemptions. Generally you can claim yourself, your spouse and dependant children. The second page of the W-4 form contains a worksheet to help determine the number of allowable exemptions. However, if you are still unsure as to how many exemptions to claim, visit the IRS website and access the IRS Withholding Calculator.

4. Insert the total number of exemptions calculated in Step 3 above into the appropriate box on the W-4 Employee's Withholding Allowance Certificate.

5. Submit the completed form to your employer. Be sure to keep a copy of your completed and signed W-4 for your files.

Tips & Warnings

• You can authorize the federal government to take an additional amount out of your paycheck if you think you are not having enough withheld. Insert the additional amount to be withheld on line 6 of form W-4.
• Do not artificially inflate the number of tax allowances on your W-4 form in order to have less money withheld. Remember, when you sign the W-4 form, you affirm "under penalties of perjury" that you have correctly completed the form with accurate information.
• If you do "accidentally" inflate the number of tax allowances, you must claim the proper number when you file your taxes in April. If you grossly underpaid the government throughout the year and did not have enough taxes withheld, you may be subject to a fine.