Here's how to choose the right filing status. Your W-4 reflects you current family situation. If you had a baby or had a teenager turn 18 this year, your tax situation is changing and you may want to update your W You accurately estimate your other sources of income. Capital gains, interest on investments, rental properties and freelancing are just some of the many other sources of non-job income that might be taxable and worth updating on line 4 a of your W You accurately estimate your deductions.
The W-4 assumes you're taking the standard deduction when you file your tax return. If you plan to itemize presumably because itemizing will cut your taxes more than the standard deduction will , you'll want to estimate those extra deductions and change what's on line 4 b. Need more help? There are worksheets in the Form W-4 instructions to help you estimate certain tax deductions you might have coming.
You take advantage of the line for extra withholding. If you want to have a specific number of extra dollars withheld from each check for taxes, you can put that on line 4 c. Social Security and Medicare taxes will still come out of your check, though. Generally, the only way you can be exempt from withholding is if two things are true:. You got a refund of all your federal income tax withheld last year because you had no tax liability, and.
You expect the same thing to happen this year. You still need to complete steps 1 and 5. You can change your W-4 at any time, but if any of these things happen to you during the year you might especially want to update your W-4 so your withholdings reflect your tax life:.
You have a kid. You buy a house. You take a pay cut or get a big raise. You have a lot of dividend income. You or your spouse freelance on the side. Tinkering is OK. You're allowed to give your employer a new W-4 at any time. That means you can fill out a W-4, give it to your employer and then review your next paycheck to see how much money was withheld. Then you can start estimating how much you'll have taken out of your paychecks for the full year.
If it doesn't seem like it'll be enough to cover your whole tax bill, or if it seems like it'll end up being way too much, you can submit another W-4 and adjust. If you want an extra set amount withheld from each paycheck to cover taxes on freelance income or other income, you can enter it on lines 4 a and 4 c of Form W How to fill out a W-4 form. What should I put on my W-4? What is a W-4 form for? You can also list other adjustments, such as deductions and other withholdings.
When you fill out your W-4 , you are telling your employer how much to withhold from your pay. A withholding allowance was like an exemption from paying a certain amount of income tax. So when you claimed an allowance, you would essentially be telling your employer and the government that you qualified not to pay a certain amount of tax. If you were to have claimed zero allowances, your employer would have withheld the maximum amount possible.
If you claimed too many allowances, you probably ended up owing the IRS money. Since the W-4 is far simpler than it has been in the past, it might seem harder to change your total withholding.
The loss of allowances on the form might seem especially irksome, but not to worry. There are still plenty of ways to affect your withholding. Second, the total number of dependents you claim also has a significant effect on your total withholding, so make sure you claim the correct number of dependents in Step 3. Finally, Section 4 of the W-4 is a bit more open ended. Use the worksheet on page 3 of the W-4 to figure out your deductions.
You should generally increase your withholding if: you hold more than one job at a time or you and your spouse both have jobs Step 2 or you have income from sources other than jobs or self-employment that is not subject to withholding Step 4 a. When should I decrease my withholding? I want a refund when I file my tax return. How should I complete the redesigned Form W-4?
Why do I need to account for multiple jobs Step 2? I have never done that before. Which option in Step 2 should I use to account for my multiple jobs?
Which is most accurate? What if I don't want to reveal to my employer on my W-4 that I have a second job? Step 2 allows you to choose one of three options, which involve tradeoffs between accuracy, privacy, and ease of use: Step 2 a : For maximum accuracy and privacy, use the Tax Withholding Estimator at www. You will generally be guided to enter an additional amount to withhold in Step 4 c. While you will need to know the approximate amount of pay for each job, you will enter the additional amount of withholding in Step 4 c on the Form W-4 for only one of the jobs.
If pay for any of the jobs changes significantly, you will need to use the Tax Withholding Estimator again and furnish a new Form W-4 to change the amount in Step 4 c to have accurate withholding. Step 2 b : If you do not have access to the Tax Withholding Estimator but wish to have roughly accurate withholding and retain privacy, you may use the Multiple Jobs Worksheet on page 3.
You will be guided to enter an additional amount to withhold in Step 4 c. If a change in pay for any of the jobs changes the additional withholding amount in the lookup table used with this worksheet, you will need to furnish a new Form W-4 to change the amount in Step 4 c to have accurate withholding.
If you and your spouse have a total of only two jobs and the pay at the higher paying job is more than double the pay at the lower paying job, this option is generally more accurate than choosing Step 2 c. If the pay at each job is more similar, choosing Step 2 c is more accurate than choosing Step 2 b. Step 2 c : If you and your spouse have a total of only two jobs held at the same time, you may check the box in Step 2 c on the Forms W-4 for both jobs. That is, to use this option, you should complete a Form W-4 for each job with the box in Step 2 c checked.
The standard deduction and tax brackets will be cut in half for each job to calculate withholding. You will not need to furnish a new Form W-4 to account for pay changes at either job. This option is accurate for jobs with similar pay; otherwise more tax than necessary may be withheld from your wages. This extra amount will be larger the greater the difference in pay is between the two jobs. The instructions above Step 3 say that in multiple job households, adjustments in Steps 3 — 4b are to be made on only one form, and that withholding will be most accurate if the adjustments are made on the W-4 for the highest paying job.
But what happens if pay at two jobs is relatively similar or if changes in pay over time result in another job becoming the highest paying? What if I have side work where I'm not treated as an employee? What if I don't want to reveal the amount of my non-job income, such as income from earnings on investments or retirement income, on my Form W-4 Step 4 a?
Is there a computer program I can use to help me complete Form W-4? You should consider using the withholding estimator if you: expect to work only part of the year this does not apply if you are only switching jobs , had a large balance due or refund last year and it is no longer the beginning of the current year, have dividend or capital gain income or are subject to additional taxes, such as the additional Medicare tax, have self-employment income, prefer the most accurate withholding for multiple job situations, or prefer to limit information provided in Steps 2—4 but do not want to sacrifice accuracy.
Are new employees first paid after required to use the redesigned form? How do I treat new employees first paid after who do not furnish a Form W-4? What about employees paid prior to who want to adjust withholding from their pay dated January 1, , or later? Employees must use the redesigned form. May I ask all of my employees paid before to furnish new Forms W-4 using the redesigned version of the form?
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