W-4 allowances reduce your taxable income, lower your tax withholding and increase your take-home pay. However, if you claim allowances you’re not entitled to, you’ll likely owe the Internal Revenue Service some cash. Allowances are based on each employee’s personal and financial situation; there are no set rules for how many you can claim. The key is to look at your own situation truthfully, and never make a claim you can't support.
How many allowances you should choose depends on your unique personal and financial situation.
Selecting Your Allowances
Read through lines A through G of the Personal Allowances Worksheet section of the W-4 and choose only the allowances that apply to you. Each allowance has its own requirements. For example, on line A, enter "1" to claim an allowance for yourself if no one else can claim you as a dependent.
You may claim if you plan on filing as head of household on line C or enter "0" to avoid having too little tax withheld. If you have child dependents, you can claim an allowance for each of them on line E, assuming your spouse doesn't claim them on their W-4.
Requirements for Married Couples
You might need to fill out page 3 of the W-4 if you both work, intend to itemize your deductions or claim income adjustments. For example, as of 2019, if your combined income exceeded $53,000, you had to fill out the Two-Earners/Multiple Jobs Worksheet on page 2 to avoid having too little tax withheld from your paychecks.
Also, if you plan to claim certain deductions on your tax return, such as medical expenses, charitable contributions and home mortgage interest, complete the Deductions and Adjustments Worksheet on page 3.
Withholding Certificate Completion
Fill out the Employee's Withholding Allowance Certificate on page 1 of the W-4. Include your filing status on line 3. If you plan to file a separate tax return, check the "Married, but withhold at higher Single rate" box. If you intend to file jointly, check the "Married" box.
Transfer the total allowances from line H of the personal allowances section to line 5 of the withholding certificate. If you completed the Two-Earners/Multiple Jobs Worksheet on page 3, put the extra amount that should be withheld from each of your paychecks on line 6. Sign and date the certificate and give it to your employer.
Understanding W-4 Resubmissions
Although the IRS doesn't cap W-4 allowances, the form may be subject to review. The agency once required employers submit W-4s for employees who claimed more than 10 allowances, but it wasn't necessary at the time of publication. The IRS can ask employers to resubmit a W-4 for someone who appears to be claiming the incorrect number of allowances. The IRS might send the employer a lock-in letter to change those allowances.
Completing Form Updates
You may change your allowance count whenever you undergo a change in your personal or financial situation. Complete a new W-4 and submit it to your employer in time for the pay period you want the change to occur. For example, if you adopt a baby, you need a new form to claim the adopted child as an additional dependent.
- Changing Withholdings at Work After a Baby
- How to File Separate Income Taxes When Married
- How to File Taxes Jointly While Married
- How to Change an Income Tax Return After Filing
- How to Amend a Return to Increase Deductions & Claim Dependents
- Advice on Filling Out a W4 Form
- How to Reduce Tax Withholding
- How to Calculate Federal Withholding Tax Using the Percentage Tables