How to Calculate the Number of Allowances for Your W4
The Internal Revenue Service (IRS) requires your employer to give you a W-4 form when you are hired. A W-4 form helps your employer determine the amount of federal income tax that should be withheld from your paychecks. You can claim allowances on your W-4; each allowance gives you an amount that reduces your taxable wages. Properly calculating your allowances avoids potential problems with the IRS.
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Instructions
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Check the personal allowances worksheet section of your W-4 to see the allowances you can claim. Each employee's situation is different; therefore, complete the form as it relates to you.
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Complete lines A through G to claim your allowances. For example, you are entitled to an allowance in each of the following situations: no one else can claim you as a dependent; you are married; you are single with one job; you are married with one job and your spouse is unemployed; your earnings from your second job or your spouse's earnings are $1,500 or less; for each of your dependents; your filing status is head of household; your child or dependent care expenses equal at least $1,900. For child tax credit, you may qualify for one or two allowances per child.
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Add up your allowances. Write the total on line H. Complete the employee's withholding allowance certificate portion of the W-4; include your total allowances on line 5. Give the allowance certificate to your employer and keep the worksheet for your records.
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Tips & Warnings
Use the IRS withholding calculator if you need help adjusting your W-4. The calculator shows you how to adjust the form so you avoid underpaying or overpaying federal income tax.
To determine what each allowance is worth, consult IRS Circular E for the tax year in question. For example, in 2011, one allowance for a weekly payroll period is $71.15; two allowances for a biweekly pay period is $142.31 (see page 35 of IRS 2011 Circular E). Subtract your allowance sum from your gross income to arrive at your taxable wages.
Do not claim more allowances than you qualify for. This can result in too little taxes withheld from your paychecks and owing the IRS when you file your tax return.
References
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