Form W-4 – Explained
Form W-4, formally known as “Employee’s Withholding Certificate,” is a form created by the IRS that informs employers how much tax to withhold from each of their employee’s paycheck. This form is used to calculate payroll tax withholdings in order to remit these taxes to the IRS and state (if applicable), on the employee’s behalf.
Step 1: Fill out your personal Information
Fill out your legal name, address, Social Security number and tax-filing status.
Step 2: Accounting for multiple jobs
If you or your wife (if you file jointly) is working more than one job or have self-employed income, see below to get accurate withholding:
- The W-4 for the higher paying job, fill out steps 2 to 4(b) of the form and leave those steps blank for the other jobs.
- If you are your spouse both earn the same amount and are married filing jointly, you can check the box associated with Step 2(c) “If there are only two jobs total…”. Please note, however, that both spouses need to fill out their W-4s if you check this box.
- If you are filling out your W-4 and don’t want your employer to know that you have a second job or other income, there are a few options, including:
- On line 4(c), you can instruct your employer to withhold an extra amount of tax from your paycheck; or
- Don’t factor your extra income into your W-4, but instead, send in estimated tax payments to the IRS yourself.
Step 3: Claiming dependents, including children
If you have kids and dependents and your total income is under $200,000 ($400,000 married filing jointly), you can enter the number of dependents (including children) and multiply them by the credit amount for the corresponding year. See this overview for the IRS Rules for Claiming a Dependent.
Step 4: Personalizing your withholdings
If you want to either withhold extra tax because you would rather overpay and receive a refund or you expect to claim deductions other than the dependents in Step 3 and the standard deduction,
Step 5: Turn in your W-4
Sign and date your W-4 and turn it into your employer’s payroll or human resource team.
Disclaimer: The information provided above is not meant to be legal or tax advise. You should consult your CPA and attorney to determine the best course of action for your situation.
Mitzi E. Sullivan CPA, PLLC is a cloud based professional services provider specializing in cloud accounting.