How to Fill Out a W-4 Form (and an Overview of What It Is)
Employees fill out a W-4 form so employers know how much money to withhold from each paycheck for federal tax purposes.
Understanding the American tax system can feel complicated and time-consuming for both employees and employers alike. While the average employee doesn’t have to fill out most of the 800 IRS forms that exist, every employee will need to fill out a W-4 form. In this article, we tackle what exactly a W-4 form is at a high-level, and how to fill one out.
The basics: What is a W-4 form?
A W-4 form is filled out by employees so employers know how much money to withhold from each paycheck for federal tax purposes. The employee is not meant to send this form directly to the IRS but simply gives it to their employer.
Who fills out the form?
W-4 forms are filled out by the employee when starting a new job, and the form includes personal and financial questions (e.g. marital status and other income streams) that dictate how much an employer should withhold from the employee’s paycheck.
How often should I fill out a W-4 form?
W-4 forms should be filled in when starting any new jobs and updated when there is a change in your life that impacts you financially — such as a raise, the birth of a child, or buying a new home.
Even if there have been no changes that impact you financially, W-4 forms should be filled out annually, since the form changes every year. Filling it out yearly will help you avoid owing the federal government money at the end of the year (sometimes a very large sum that you may not have accounted for), or getting money back that could have been invested earlier.
Other reasons for updating your W-4 form include:
- You or your partner become unemployed for any period of time
- Your child is no longer considered a dependent
- You get another job (on top of the one you already have)
- You get married or divorced
Also fill out a form for every job that you have where your employer is withholding money for tax purposes. Follow these steps to fill out a W-4 form.
W-4 forms should be filled in when starting any new jobs and updated when there is a change in your life that impacts you financially.
Step 1: Personal information
This section is simple and includes your name, address, social security number, and address.
In this section, you also fill in your filing status (single or married). Single people will pay a higher tax rate.
Step 2: Multiple jobs or spouse works
Steps 2-4 do not apply to every employee filling out a W-4, so first make sure these sections are relevant to you. Step 2 only needs to be completed if:
- You have more than one job, or
- If you’re married and filing jointly with a spouse who also works
There are 3 ways to fill out step 2 of the form, but you only need to do 1 of the 3 (a, b, or c).
While this section is one of the more complicated sections of the form, it’s key to take your time filling it out correctly to ensure enough taxes are withheld to cover all of your income streams.
The IRS has a withholding estimator app that can help you calculate how much tax to withhold from your paychecks. This option will be the most accurate of the three.
Instead of using the IRS app linked above, you can fill out the “Multiple Jobs Worksheet” on page 3 of the form. This is a more manual option than 2a, but more private, and requires you to look up your income in a table and then divide your income by how many pay periods your job has (e.g. bi-weekly or monthly).
Line 1: If you have two jobs, or you’re filing jointly with a spouse who also works (2 jobs total), you’ll fill out line 1.
Go to the table on page 4 of the form, and use the table based on how you’re filing (e.g. single filer, married filer, etc). After finding the box where the higher salary and the lower salary meet, put that number on line one.
Line 2: If between you and your spouse you have 3 jobs total, use this line.
Line 2a: This line is for the two highest-paying jobs of the 3. On the chart that applies to you
(married, single, etc), find your highest paying job on the right side of the chart under “higher paying job”, and cross-reference it with your second highest paying job under “lower-paying job”, and put that number on line 2b.
Line 2b: On the same chart, use the sum of 2a as the “higher paying job”, and cross-reference it with the pay from the lowest paying job of the 3 in the “lower-paying job” column. Take the number at that intersection, and that value goes on line 2b.
Write the sum of lines 2a and 2b on line 2c.
Line 3: Fill in how many pay periods your job has.
Line 4: Here you divide the amount on either line 1 or 2c by the number of pay periods you wrote in on line 3.
This option is the easiest to fill out of the 3, but also the least accurate. It assumes that both jobs being claimed on the form (for both you and your spouse/partner) have similar compensation, so you don’t have to do any calculations in steps a or b. You would check the box next to 2c, and have to check this same box for each W-4 form you fill out, and your spouse will have to do the same.
If you did 2a or 2b, the number calculated can be written in line 4c.
Step 3: Claim dependents
Only fill out this section if you make 200k or less as an individual filer, or 400k or less if filing with your spouse, and have dependents (i.e. children). If you’d like to make sure you’re eligible for the child tax credit (CTC), read this document.
If you have more than one job, only complete this section on one of your W-4 forms, at your highest paying job, for the most accurate withholding calculation.
Step 4: Other adjustments
There are 3 optional parts in this section if you need your employer to withhold additional taxes from your paycheck.
Step 4a: You would fill this section out if you have any other taxable income outside of your job (i.e. retirement, interest, etc).
Step 4b: This section is for employees who want to claim itemized deductions. Itemized deductions might include charitable contributions and mortgage interest. Other possible itemized deductions can be found here. The standard deduction in 2021 is $25,100 for people filing jointly, $12,550 for single and married filing separately, and $18,800 for those filing as head of household.
Step 4c: You’d fill this section out if you have any other withholdings you’d like withheld from your paychecks, PLUS what you calculated in section 2, if you opted to calculate your withholdings using step 2a or 2b.
Step 5: Signature
As with all government documents, only signed forms are valid.
It’s important to remember that these forms change annually, and should be updated yearly, and any time there is a change in your life that impacts you financially. And while this article covers how to fill out a W-4 form, it should not be taken as official IRS or tax advice, and you should always consult an accountant if you have any questions about how to fill out your personal W-4 form.