If you have landed your first job or are starting a new job, you will need to fill out a W-4 (Employee's Withholding Certificate) form so that your employer can determine how much tax to withhold from your paycheck.
It's important to complete the form accurately, because if too little is withheld, you may owe tax to the Internal Revenue Service (IRS) when you file your tax return and then owe a penalty. If too much is withheld, you will generally be due a refund. When you change jobs or your personal or financial situation changes, complete a new W-4 form.
What is a W-4 Form?
The W-4 form is completed by an employee, so that the employer can withhold the correct amount of federal income tax from your pay.
When you are hired for a new job, you will be required to complete a W-4 form to let your employer know how much tax to withhold. Prior to starting employment, you can fill out a PDF version of the W-4 form online and print it out. Your employer will advise you of the best way to submit it.
The W-4 form indicates to employers how much they need to deduct from your wages for federal income tax.
In addition to when you start a job, it's also a good idea to review withholding amounts on a regular basis to ensure the appropriate amount of tax is withheld from your pay.
Review the Instructions
Before you begin filling out the W-4 form, plan to sit down with your spouse to determine whether or not you will be filing a joint tax return together for the current year. Also review the information you'll need to complete the form.
How to Complete a W-4 Form
Step 1: Complete your personal information. List your name, address, social security number, and tax-filing status. Tax filing options include the following:
- Single or Married filing separately
- Married filing jointly or Qualifying widow(er)
- Head of household (if you’re unmarried and pay more than half the costs of keeping up a home for yourself and a qualifying individual)
Steps 2 – 4 only apply if you have multiple jobs, your spouse works, you have dependents, or you have other income, deductions, or extra withholding. If these don’t apply to you, you go can go directly to Step 5.
Step 2: Complete if you have multiple jobs or your spouse works. Complete this step if you hold more than one job at a time or are married filing jointly, and your spouse also works.
Step 3: Claim your child and other dependent tax credit. If your total income is under $200,000 ($400,000 if filing jointly) or less, list your number of children under age 17 and multiply by $2,000. If you have other dependents, multiply the number of them by $500. Enter the total amount.
Step 4: Other adjustments. If you want tax withheld for other income you expect this year that won’t have withholding, list the amount of other income here. This may include the following:
- Other income not from jobs, such as interest, dividends, or retirement income.
- Additional deductions (use the deductions worksheet on page 3 of the form to calculate the amount you want withheld).
- Extra withholding (any extra withholding you want to be deducted from each paycheck).
Step 5: Sign and date the form.
Updating Your W-4 Form
Even if you haven't just landed a new job, you can file a new W-4 form with your employer if your personal or financial situation changes or if you have found that you have too high a tax bill or too large a refund when you file.
The U.S. tax system is pay-as-you-go. Taxpayers are required by law to pay most of their tax obligation during the year, rather than at the end of the year. This can be done by either changing your deductions and having more tax withheld from paychecks or pension payments, or by making estimated tax payments.
Usually, a penalty applies at tax filing if too little is paid during the year. Typically, the penalty would not apply if tax payments during the year meet one of the following tests:
- The person’s tax payments were at least 90% of the tax liability for the current year
- The person’s tax payments were at least 100% of the prior year’s tax liability.
If you forget to submit your W-4 in time for the end of the year, the IRS will treat your income like that of a single person without any withholding allowances. Depending on your situation, this could be problematic, so be sure to submit the form as soon as possible while it is still fresh on your mind.
The information contained in this article is not tax or legal advice and is not a substitute for such advice. State and federal laws change frequently, and the information in this article may not reflect your own state’s laws or the most recent changes to the law. For current tax or legal advice, please consult with an accountant or an attorney.