The way you fill out your W-4 form greatly influences the amount of federal income tax your employer takes out of each paycheck. Federal income tax withholding depends on your filing status and number of allowances that you claim on your W-4. So the right amount of tax is withheld from your pay, update your W-4 whenever you undergo certain changes in your personal or financial life.
Take a look at your current situation to see if you need to change your W-4. Some of the most common events that affect your W-4 include getting a second job, your spouse gained employment or changed his job, you recently had a baby or obtained a dependent, or you got married or divorced. A change in any of these could mean a change in the taxes you must pay.
Ask your employer for a new W-4. You cannot make updates to the old form; it must be done on a new one.
Go through lines A to G of the Personal Allowances Worksheet section of the W-4. Choose the allowances that apply to your current situation. For example, if you got married, you can claim an allowance for your spouse on line C. However, if you have more than one job or if your spouse has a job, you can choose not to claim an allowance on line C; this could help to avoid underpaying federal income tax.
If you gained a dependent, such as a new baby, put your number of total dependents on line D. Before you claim dependents, make sure they meet IRS qualifications. Also, make sure you and your spouse are not claiming the same dependents. Note that head of household filing status puts you in a lower tax bracket than married, but you cannot file as such if you married; you must be unmarried and pay more than 50 percent of the cost of supporting yourself and your dependents. Put your total number of allowances on line H.
Complete the Employee’s Withholding Allowance Certificate section of the W-4. Include your filing status on line 3. If you are married but want more taxes withheld from your pay, you may check the “Married but withhold at higher Single rate” box; or, you may put the additional amount you want withheld from each of your paychecks on line 6. Transfer the total number of allowances on line H to line 5.
Sign and date the withholding allowance certificate portion of the W-4 and give it to your employer in time for the pay period that you want the change to happen.
- You may use the IRS withholding calculator to help you update your W-4. Based on your inputted information, the calculator shows you how to complete your W-4 so you pay the right amount of federal income tax.
Grace Ferguson has been writing professionally since 2009. With 10 years of experience in employee benefits and payroll administration, Ferguson has written extensively on topics relating to employment and finance. A research writer as well, she has been published in The Sage Encyclopedia and Mission Bell Media.