Do You Have to Enter One for Yourself on a W-4?
When you start a new job, you receive a stack of paperwork from your employer. One of those papers you need to fill out is a W-4 form. That form tells the employer how much to withhold from your paycheck to cover taxes, based on your income and the number of exemptions you claim.
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Exemptions
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You are entitled to claim an exemption for yourself, and one each for your spouse if you are married and any dependents you have. But you do not have to claim any exemptions at all if you do not want to. If you claim zero exemptions on your W-4, your tax withholding will be higher, and your take-home pay will be lower than it would be if you claimed yourself as an exemption.
Tax Refund
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If you do not claim yourself as an exemption, the amount withheld from your paycheck is higher. That means that you could be in line for a larger tax refund than you would otherwise receive. If you enjoy knowing that you will receive a big tax return each spring, claiming zero exemptions is a good tactic. If you would rather have that money in your paycheck each week, it makes sense to claim the number of exemptions to which you are entitled.
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Tax Planning
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There are times when you want to have the maximum tax amount withheld from your paycheck. For instance, if you make money on the side or earn a lot of interest on money you have saved or invested, that extra income could increase your tax liability. That extra money could mean you owe money to the IRS at the end of the year. You can avoid that problem by lowering the number of exemptions you claim on the W-4 form, thus increasing your tax withholding.
Mid-Year Adjustments
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You do not have to stick with the exemptions you claimed on your W-4 form forever. If you find that too much, or too little, is being withheld from your paycheck, simply contact your employer's human resources department and ask for another form. Your new withholding amount will take effect once the W-4 form has been received and processed.
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