It’s no secret that the IRS excels at making things complicated. And when you’re busy learning the ropes of a new job, trying to fill out a 4-page W-4 form can be a huge hassle. It’s not a good idea to rush through it, though, because a small mistake now can mean withholding too much or too little of your salary for covering your taxes. There have also been several recent changes to the W-4, so you may need to make some adjustments to your current form on file.
No worries, though, SouthPoint is here to help! We’ll walk you through a W-4 form and show you how to fill it out in five easy steps. It’s important to note that only Step 1 and Step 5 are mandatory; the rest are optional.
Step 1: Enter your personal information
First, you’ll need to fill out your personal information, including your legal name, residential address and Social Security number. You’ll also be asked to indicate whether you are filing taxes as a single individual, a married partner filing jointly or as the head of a household. According to the IRS, “Head of household” should only be checked if the filer is not married and pays more than half the costs of keeping up a home for themselves and another qualifying individual.
If you believe you are exempt from filing taxes, you may need to complete Step 1(a), Step 1(b), and Step 5 (you’ll also write “Exempt” in Step 4(c), as indicated below.) Before doing this, though, make sure you are truly exempt, which means you have no tax liability and did not need to file a tax return last year. Mistakenly filing as exempt can land you a giant bill come tax time, complete with penalties for late payments.
If you are a single tax filer or married to a nonworking spouse, have no dependents, only have one job and aren’t claiming deductions or credits beyond the standard deduction, you can skip the next three steps. Just sign and date your form now.
Step 2: Multiple jobs or spouse works
You only need to complete Step 2 if you hold more than one job, or you are married and filing jointly with an income-earning spouse. Be sure to read the instructions carefully. You’ll have three options in Step 2:
- Use the IRS’s online Tax Withholding Estimator to determine how much to withhold below in Step 4(c).
- Fill out the Multiple Jobs Worksheet, provided on page three of Form W-4, and enter the result in Step 4(c), as explained below. The IRS recommends only filling out the worksheet on one W-4 form per household, entering only the result of the highest-paying job.
- You can check off this box on the W-4 form if there are only two jobs in total and both jobs have similar pay.
Step 3: Claim dependents (if applicable)
If you have multiple jobs, or if you are married filing jointly and you and your spouse each have a job, you’ll also complete Step 3 on the W-4 form for the highest-paying job.
Step 3 involves some math: If your income is $200,000 or less, or $400,000 or less if you are married and filing jointly, multiply each qualifying child under age 17 by $2,000 and each additional dependent by $500. Add up these numbers and list the total as indicated by Step 3 on the W-4.
Step 4: Make other adjustments (optional)
Step 4 is optional, but you may want to fill it out if you have multiple jobs, or you are married filing jointly and you and your spouse each have a job. If this applies to you, fill out lines 4(a) and 4(b), but only for one of these jobs. Here, too, the IRS recommends filling out these lines on the W-4 form associated with the highest-paying job. These lines can be left blank on your other W-4 forms.
For line 4(a), you’ll tally up all other taxable income not earned from jobs, including interest, dividends and retirement income. This will enable you to deduct the necessary tax out of your paycheck now so you don’t have to pay it later.
For line 4(b), you’ll need to turn to Page 3 on your form and fill out Step 4(b) — Deductions Worksheet. This worksheet will help you determine whether you’re better off taking the standard deduction or itemizing your deductions. You’ll also be able to tally up any other applicable tax deductions, such as student loan interest or deductible IRA contributions.
Once you’ve filled out lines 4(a) and 4(b), you’re ready to fill out line 4(c), which indicates the amount of additional tax you’d like withheld each pay period, such as taxes for a side job you hold as an independent contractor or gig worker. You may have already calculated this number when you completed Step 2 above. If you are exempt from filing taxes, write “exempt” here, as mentioned above.
Step 5: Sign here
Don’t forget to sign and date the W-4 before turning it in to your employer. If you’ve filled it out carefully, you should have just the right amount of money withheld from your paycheck so that you won’t have a huge tax bill to pay in April, and you won’t have a large refund either.
If your life circumstances change and you need to change something on your W-4, you can always make an adjustment. If you get married, have a baby or take on a second job, you’ll need to adjust your W-4 accordingly.