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7 Min. Read

How to Fill Out W-4 Form: A Detailed Guide

How to Fill Out W-4 Form: A Detailed Guide

Regardless of whether you work for an employer, own a company that employs others, or earn income from self-employment, taxes are an integral part of life. As part of the tax payment process, several forms, such as Form W-4, are required.

If you are employed in a traditional job and receive a W-2 annually, Form W-4 instructs your employer on the amount of tax to withhold from your paychecks throughout the year.

In this guide, we'll cover the purpose of a W-4 form, how to fill out each step, and how you can maintain accurate tax filing status year after year.

Here’s What We’ll Cover:

What is the Purpose of a W-4 Form?

Recent W-4 Form Updates to Know

How to Fill Out Form W-4

Tax Withholding Scenarios

Where to Submit a W-4

How and When to Update a W-4

More Tax Resources for Employees

What is the Purpose of a W-4 Form?

A W-4 form, also known as the Employee's Withholding Certificate, is an IRS document that clarifies your personal tax responsibility as it relates to your employer.

Each time you begin a new job, you'll need to fill out a new W-4 form. The form provides information about your filing status, employment background, dependents, and optional adjustments and deductions.

In terms of federal income tax, a few things happen when you submit a W-4 form.

  • Your employer is aware of important tax withholding information about you (and your family, if filing jointly).
  • When completing payroll, the employer knows how much to withhold from your paycheck for federal and state income taxes.
  • Your taxable income (not including retirement contributions and other pre-tax income) is adjusted based on your withholding amounts.

Recent W-4 Form Updates to Know

The IRS makes annual updates to the W-4. When you fill out a new W-4 form, make sure that you have the most recent version. After the 2020 tax year, the IRS made several updates to the form, including:

  • Updating the form name to "Employee's Withholding Certificate"
  • Doing away with the option to claim personal deductions
  • Removing the Personal Allowances Worksheet from the standard W-4 form

Although annual form updates may not affect every employee, it's good practice to submit this tax form every year. Doing so ensures that your employer's tax deductions per paycheck are accurate, and that your experience with annual tax returns is as predictable as possible.

How to Fill Out Form W-4

The information you submit on your W-4 directly affects the money an employer can withhold from your paycheck. Fill it out according to guidance provided by the IRS to ensure that your income tax amount is acceptable.

Step 1: Enter Personal Information

The first step of the form includes data such as your name, address, social security number, and filing status. The options are:

  • Single or married filing separately
  • Married filing jointly or qualifying widow(er)
  • Head of household

The filing status in Step 1 dictates how much income tax you are responsible to pay annually based on your family situation.

Step 2: Multiple Jobs or Spouse Works

At Step 2, you might be wondering, "Why does my employer need to know about my spouse or another paying job?"

The numbers you submit in this step help the IRS understand your overall tax liability as a single filer, or in conjunction with your spouse or head of household. This means that your withholding amount will be more accurate at filing time.

Step 2 also includes the Multiple Jobs Worksheet which is located on page 3 of Form W-4. This IRS worksheet helps you calculate the appropriate amount of federal income tax if you hold multiple jobs (or if married filing jointly with a working spouse).

Step 3: Claim Dependents

Step 3 has income qualifications and only applies to taxpayers making less than $200,000 as a single filer or less than $400,000 if married filing jointly (according to Child Tax Credit regulations). Follow the steps on Form W-4 to calculate $2,000 in credit for each dependent under 17 years of age, and $500 for other dependents.

Important Reminder for Form W-4 and Multiple Jobs

Note: If you submit Form W-4 for multiple jobs, only complete Steps 3-4(b) on the first W-4. It's good practice to complete these steps on the W-4 of the highest paying job only. For any other paying job, fill out the new form but leave these steps blank to ensure accuracy.

Step 4: (Optional) Other Adjustments

After Step 3, you can tweak your deductions and withholding. This section of Form W-4 often applies  to taxpayers who don't claim the standard deduction.

Use this step on Form W-4 to account for:

  • Other income (not from a traditional job)
  • Deductions (using the Deductions Worksheet on page 3)
  • Extra withholding (money that your employer subtracts from each paycheck)

Step 5: Sign Here

The final step on the form is a signature. Verify your information, particularly your social security number. Once you are comfortable with your withholdings, sign and date the form.

The next step involves your employer signing and entering their Employer Identification Number (EIN) for the IRS.

Tax Withholding Scenarios

Everyone's tax experience is unique. While some payers expect a tax refund, others anticipate owing money at the end of the year. To avoid extremes, use the Tax Withholding Estimator as you complete your W-4.

If you have questions about your personal tax liability and are not sure how much tax to withhold, the following scenarios are most common.

Have More Money Withheld from Your Paycheck

It's suitable for an employer to withhold more money from your paycheck when:

  • It is your highest paying job (of multiple jobs)
  • You wish to create a tax buffer throughout the year to avoid owing money
  • The withholding estimator indicates you aren't paying enough
  • You have owed money on a previous tax return

Have Less Money Withheld from Your Paycheck

Consider updating your W-4 to lower the amount of taxes deducted per pay period if:

  • You received an excess of money back on a recent tax return
  • You are exempt from withholding based on household income
  • The IRS Tax Withholding Estimator indicates this scenario

Where to Submit a W-4

It's not necessary to submit a W-4 form directly to the IRS, but you should return an electronic or paper copy back to your employer. A company's HR or payroll department is generally in charge of maintaining records and letting you know if something needs to change.

While you won't need this form at the end of the year to complete a tax return (unlike a W-2 form), keep your own copy on file for reference.

How and When to Update a W-4

When you experience a significant life change, remember to update your W-4 and withhold tax information. Many people forget this step, but it's vital if you want to experience a stress-free tax season the following year. Life changes that dictate a new W-4 form include:

  • Change of employer(s)
  • Addition or loss of extra income
  • Self employment income
  • Change in marital status
  • Update to number of qualifying dependents
  • Update to additional withholding amount

Should you need to fill out a new W-4, always communicate directly with your employer or HR department. Not only can they help you understand how to fill out W-4, but they can also update your information quickly to ensure the fastest change to your federal income tax withholding per paycheck.

More Tax Resources for Employees