How to Calculate What to Claim on Your W-4

The W-4 is a form provided by the Internal Revenue Service (IRS) to determine the correct amount of tax withholding to deduct from your wages. When completing this form, the employee calculates the number of allowances to request. The form can be confusing at times. The IRS attempts to make this an easy process. Each W-4 form has a list of eight questions for you to answer, intended to lead you to the correct total allowances. To help clarify the calculation, there is an online program provided on IRS.gov, which will help you decide what you should declare on your next W-4.

Things You'll Need

• Last paycheck

Instructions

1. Open the IRS.gov withholding calculator on your computer (see References).

2. Determine what your filing status will be for the current year. Choices include single, married filing a joint return, married filing separate return, head of household and qualifying widow. Click on the appropriate option.

3. Move the next question and click yes or no for “Can someone else claim you as a dependent?” Click on the “continue” button.

4. Navigate to the first question under General Information. Provide answers to all the questions in this section.

5. Move to the Child and Dependent Care Credit section. Enter the relevant information about your childcare payments. Click the “continue” button.

6. Estimate your wages in the first text box of the Income and Withholding page. Continue to move down the page and answer the questions. Have your last pay stub available to provide some information. When entering numbers, round up to the next highest number. For instances, if your year-to-date deductions total $157.83, enter 158 in the text box. If you are unsure what number to enter, provide your best estimate. If the answer is zero, type in a 0. Click the “continue button” when you have completed the page.

7. Click the “continue” button on the Deductions page unless you wish to itemize your deductions. The form will use the standard deduction to calculate unless you answer the itemization questions.

8. Follow the instructions provided on the last screen to complete your W-4. The screen will show you exactly what to write on your form.

Tips & Warnings

• Plan ahead. When you know you will be filling out a new W-4, complete the online calculation before you receive the form.

References

• Bankrate: Withholding: Working through the W-4 worksheet
• IRS: General Information