How to Fill out a W-4 Form for a New Job
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.
The worksheets accompanying your W-4 form will be a valuable tool to help you determine the number of allowances you should note on the actual form.
The Purpose of 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. It's also a good idea to review withholding amounts on a regular basis to ensure the appropriate amount of tax is withheld.
The W-4 form indicates to employers how much they need to deduct from your wages for federal income tax. This amount can be altered significantly depending on the number of withholding allowances a person decides to claim.
The more claims that are taken, the less money will be taken out of your paycheck for federal taxes. These allowances can be changed at any time on account of additional jobs, marriage, pregnancy or adoption, divorce, etc.
Allowances will be increased if you claim yourself, a spouse, or children as dependents. Paying childcare expenses may also add to your number of allowances as will non-wage income like dividends or interest.
If you itemize deductions on your taxes, you will want to complete the Deductions Worksheet to see if the level of your deductions indicates that you could decrease the amount that you withhold. The Multiple Jobs Worksheet calculates the extra tax for all jobs.
The IRS withholding calculator walks you through the process of evaluating your situation to determine appropriate levels of withholding.
Before You Begin
Before you begin filling out the W-4 form, it is worth sitting down with your spouse to determine whether or not you will be filing a joint tax return together for the current year. If so, review the second part (step 2) of the W-4 carefully, as this section will determine how many personal allowances you will claim as a couple. It is best practice to determine the number of allowances in advance so that when you each fill out W-4 forms with your employers, you will only list the half the total allowances (your portion of the join return) when asked.
Once the proper number of allowances and any additional amount of withholding is determined through the use of these tools, the process of completing your W-4 is quite straightforward. Step 1 contains your personal data, complete step 2 if you have multiple jobs or a working spouse, step 3 is where you enter the number of dependents, and step 4 is where you add other income and deductions, and extra withholding.
Changing Your Deductions
Even if you haven't just landed a new job, you can file a new W-4 form with your employer if your life situation and/or deductions have changed or if you have found that you have too high a tax bill when you file or too large a refund.
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. However, the 100% threshold is increased to 110% if a taxpayer’s adjusted gross income is more than $150,000, or $75,000 if married and filing a separate return.
After submitting your W-4 (through new employment or updated with new allowances), the information will go into effect quite fast. Employers are required to update employee information within 30 days of submitting the form, in time for that next pay period.
If you forget to submit your W-4 in time for the end of the year, the IRS will treat consider 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.