How to Calculate Federal Allowance

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Your federal withholding allowances determine the amount of taxes that are withheld from your paycheck each month. You estimate your allowances and record the estimate on your W-4 form. Your employer will use the W-4 input to compute the amount of taxes to be withheld from your monthly paycheck. Because allowance reflect the number of deductions you have, the more allowances you claim, the less your employer will withhold.

  • Add one allowance for yourself.

  • Add another allowance if you are single with one job, or if you are married with only one job and your spouse does not work, or your wages from a second job or your spouse's wages, or the total of both, are less than $1,500.

  • Add another allowance for your spouse if your spouse does not work and you only have one job.

  • Add an allowance from each dependent you plan to claim on your tax return.

  • Add another allowance if you plan to file as head of household on your tax return.

  • Add another allowance if you plan to claim at least $1,900 in child or dependent care expenses as a credit.

  • Add two allowances if your income is less than $61,000 if single or $90,000 if married, for each eligible child. Subtract one if you have three or more children. If your income is between $61,000 and $84,000, or $90,000 and $119,000 if married, add one allowance for each eligible child and add one additional allowance if you have six or more eligible children.

  • Sum the total allowance from steps 1 through 7. This is the base withholding allowance you place on your W-4. Although all allowances are just an estimate, if you choose to, you can refine this estimate using the Deductions and Adjustments Worksheet and the Two-Earners/Multiple Jobs Worksheet in the IRS W-4 document.

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