What Does Federal Income Tax Withholding M-3 Mean?

Federal taxation is a pay-as-you-go system. Federal tax law requires employers to deduct money from your earnings and other income, such as bonuses. Your employer sends the withheld funds to the U.S. Treasury in your name to cover your annual federal tax burden. Your earnings statement will show the amount of money your employer deducted for federal taxes for that pay period and the cumulative amount of federal taxes withheld to date.

As an employee, you fill out IRS Form W-4 to help your employer calculate the correct amount of money to withhold for federal taxes. You use the form and its worksheets to indicate your correct filing status and determine the number of personal allowances that apply to your situation. IRS Form W-4 asks whether you are married, single or married but withholding at the higher single rate. If you indicate you are married and withholding at the married rate, the federal tax line on your earnings statement should include a code beginning with an “M.” This indicates you are married for federal income tax purposes. You will likely use the same filing status when completing your federal income tax return.

Form W-4 also has a worksheet to calculate personal allowances. Each allowance you claim reduces the amount of your federal withholding. You may claim one allowance for yourself, as long as no one else can claim you as a dependent. You may also claim one allowance for your spouse. However, if your spouse works or either of you has more than one job, claiming the allowance for your spouse on your W-4 may result in your employer withholding not enough federal taxes. You may claim an allowance for each dependent -- in most cases a child who lives at home. You may also claim allowances for certain special circumstances, including qualifying for a child tax credit or as a head of household.

A M-3 designation on your earnings statement means that, for federal income tax withholding purposes, you are married and claim three personal allowances. If the designation matches your current filing status and allowances, you can relax. However, if your marital status or allowances have changed since the previous tax year, you may want to submit a revised Form W-4 to your employer. For example, if you have a new child or if an older child is no longer a dependent, you should update the number of allowances you are claiming.