How to Fill Out a W-4 Form and Allowances

The Internal Revenue Service requires all employers to have each employee complete a W-4 form to help the company determine how much money to withhold from each paycheck for federal income tax withholding. Each personal allowance you claim on Form W-4 will reduce the amount of your income subject to tax withholding. You can claim personal allowances for things like having only one job, each dependent you will claim on your return and certain tax credits.

Instructions

1. Complete the personal allowances worksheet to determine the maximum number of allowances you are allowed to claim.

2. Complete the Deductions and Adjustments Worksheet only if you plan to itemize deductions or claim adjustments to income (also known as above-the-line deductions). If this number exceeds the personal allowances you are allowed from Step 1, this is the maximum number of allowances you are allowed to claim. For example, if you were entitled to two allowances from Step 1, but the Deductions and Adjustments Worksheet allows you four allowances, you may claim up to four allowances.

3. Complete the Two-Earners/Multiple Jobs Worksheet only if you have other jobs or a working spouse. The IRS claims that your tax withholding will be most effective if you only claim your allowances on the job generating the most income and then use zero allowances for any other jobs. This worksheet will tell you how much you need to have withheld in addition to the typical withholding based on the number of allowances you are claiming.

4. Write down how many allowances you want to claim. You can claim less than you are entitled to, but not more. Write the number of allowances on line 5 of the W-4. Each allowance you claim will reduce the amount withheld from your paycheck. Claiming more will result in more take-home pay, but a greater tax liability (or smaller tax refund) at the end of the year. Claiming fewer allowances results in more withheld from each paycheck, but a smaller tax liability (or larger tax refund) at the end of the year.

5. Designate if you want any additional money withheld from Step 3. Write that amount on line 6.

Tips & Warnings

• You should fill out a new W-4 form each time your withholding situation changes. You can change multiple times per year, if needed. For example, if you have an additional dependent, you should fill out a new W-4 form.

References

• IRS: Form W-4
• Investopedia: W-4 Form