I Want to Fill Out My W-4 Withholding Form

Alden Wicker

Determine if you need to change your W-4 at all.

You only need to fill out a W-4 if:

  • You or your spouse got or will get a new job
  • You received a tax refund in April that was larger than $1,000 or had to pay additional taxes
  • You got or will get married or divorced
  • You have had a child since the last time you updated your W-4 or will have a child in the upcoming year
  • You purchased or will purchase a home
  • You got hit with the Alternative Minimum Tax (or if you think you will get hit with it because you got a raise; this tool from the IRS can help you figure that out)
  • You got or will get a windfall, like prize winnings or a lot of income from investments

If none of these apply to you, you don’t need to fill out a W-4 at all! Look, we just saved you some work!

Get a W-4.

Get in touch with the human resources department or equivalent at your job and request a W-4 to fill out. You can also download it here. If it’s your first day, HR will hand one to you without you even needing to ask. So nice of them!

Understand allowances.

An allowance is what your employer uses to determine how much you will probably pay in taxes and hence how much to withhold. They are related to the exemptionsExemptions reduce the amount of income you will be taxed on. For instance, for the 2011 tax year, you could have deducted $3,700 from your gross income to arrive at your taxable income. you take on your taxes, but not the same, so don’t expect the number of allowances to equal the number of exemptions. The more allowances you have, the less money will be withheld from your paycheck.

Get familiar with your situation.

You want to find out your ideal number of allowances, but before you can use the withholding calculator in step 5, you need to know the answers to the following questions:

  • Did you have zero tax liability last year—as in, you didn’t have anything withheld and you didn’t pay anything in April—and also expect to pay nothing this year as well? Your ideal number of allowances is 0. You indicate this on line 7 of your W-4.
  • Does someone claim you as a dependent? Find out here if this applies to you.
  • If you’re married, does your spouse make less than $1,500?
  • Do you have a dependent? Find out if you have dependents (this isn’t just for your children).
  • Are you filing as head of household? You need to be supporting a dependent to claim this. Find out your filing status.
  • Will you pay $1,900 or more in qualified child care or dependent expenses? Find out the answer here.
  • Will you claim the Child Tax Credit? Learn more.

Use the IRS withholding calculator.

The IRS withholding calculator will walk you through determining the number of allowances you should take.

Fill out your W-4.

If your finances are fairly simple, you can just use the first sheet, which is remarkably straightforward for a tax form. But there are some instances when you should use the worksheet on the second page to decide the number of allowances you will take:

  • You plan to itemize your deductions next April. Find out here if you should itemize your deductions.
  • You are married and you and your spouse both work and earn more than $1,500.
  • You yourself have two jobs.

Decide if you want additional withholding.

When you decide how much to withhold from your taxes throughout the year, you want to choose an amount that will result in you neither receiving a refund nor owing a large additional amount in taxes come April. If you got hit with a tax bill when you filed this past year and you are being recommended the same withholding as last year, you can add in additional withholding so you don’t have a big tax bill again next year. Add in the additional withholding on line 6 of the form. Just divide the amount of your tax bill by the number of pay periods left in the year and write that down. For example, if you owed $3,000 in taxes last year and get paid twice a month, you’ll put $125 on line 6 ($3,000 divided by 24 pay periods).

You should also ask to have additional withholding if you will fall into the AMT this year (see step 1), or you’ve gotten or will get a windfall in 2012 that will be taxed.

Sign the form and turn it in to your employer.

Just like it says!

Redo your budget to reflect the change in your paycheck.

Now that your withholding is different, you want to make sure you are prepared for the change in income, so pop into the My Money Center and rework the numbers in your budget so you continue to live below your means and save what you need for the future.