How to complete Form W-4: 2021
When starting a new job, one form you will need to fill out is the W-4, also known as an employee’s withholding tax certificate. This is one of the most important tax documents you will complete, as it tells your employer the exact amount of federal taxes to withhold from your paycheck.
How to file a W-4 form in 5 steps
Step 1: Enter your personal information
The first step is to fill in your name, address and social security number. Make sure your name is as it appears on your Social Security card. The IRS says that if the name you enter on the form is different from the information found on your Social Security card, you will need to contact the Social Security Administration to make sure you receive credit for your earnings.
For your tax return status, check only one of the three boxes.
- Single or married deposit separately.
- Married declaring jointly or widower (s) eligible.
- Head of household (for single taxpayers who pay more than half of the cost of maintaining their home for themselves and an eligible individual).
Step 2: Several jobs or spouse works
The second step only applies if you have more than one job at the same time or if you are married and you and your spouse are both working. If any of these scenarios apply to you, then you have three options:
- Use the IRS Withholding Estimator Tool which most accurately calculates the additional tax you must have withheld. Apply these deductions in Step 4C of your W-4.
- Use the IRS Multi-task worksheet, located on page 3 of W-4 if you and / or your spouse are working two or three jobs at the same time. After completing the worksheet, enter this amount into 4C on your W-4.
- If you and / or your spouse only have two jobs in total, you can simply tick the box located at 2C of the form (you must also tick the box on the W-4 form of your other job). By checking the box, your standard deduction and your tax brackets will be halved for each job to calculate the withholding tax. According to the IRS, this option is quite specific for jobs with a similar salary; otherwise, more tax than necessary can be withheld, and this additional amount will be greater the greater the difference in salary between the two jobs.
Step 3: Claim dependents
If you have dependents, the IRS has a tool that can help you determine who you can claim as a dependent. You can only claim dependents if your income is less than $ 200,000 or less than $ 400,000 if you are married and are filing jointly.
If you have children under 17, multiply the number of children you have by $ 2,000. If, for example, you have three children under the age of 17, enter $ 6,000 in the first space. If you have other eligible dependents, you can multiply their number by $ 500. Enter this amount in the second blank of the third section.
Step 4: Consider additional income and deductions
The fourth step, which is optional, takes into account any other adjustments you can make. This step has three parts.
- Other income (not from jobs): You can include other income you receive that is not related to jobs, such as interest, dividends, and retirement income.
- Deductions: If you plan to claim itemized deductions (other than standard deductions) to reduce your tax payable, complete the worksheet on page 3.
- Additional Deduction: You can withhold additional taxes from your paychecks for each pay period, including the amounts in the multiple job worksheet. You can designate a specific amount for withholding, such as an additional $ 10 on your paychecks.
Step 5: Sign and file with your employer
Once you have reviewed your form and verified that the data you provided is correct, all you need to do is sign and date it and return it to your employer.
What to keep in mind when filling out your W-4 form
You can change the information on your W-4 as needed. If you are starting a new job and getting the same salary, for example, you can check the box on 2C for those two jobs.
If your household finances change and you become responsible for paying most of the bills, you can change your household head status, which entitles you to higher standard deductions, reducing tax payable. .
In addition, when you complete your W-4, it does not go to the IRS but to your employer who will keep the form on deposit for at least four years. The IRS, however, reviews withholding taxes, so it’s important to fill out your Form W-4 correctly, otherwise you could end up with a higher tax bill.
Request for exemption
Some taxpayers may also benefit from exempt status. If, for example, you had no tax payable for the previous year or for this year, you can claim exempt status on your W-4. This tells your employer to refrain from withholding part of your salary for federal taxes. If you choose this option, you will need to complete a W-4 form each year before February 15 (or the first following business day if the 15th falls on a weekend) to maintain your exempt status.
FAQs on completing Form W-4
Here are some frequently asked questions about completing Form W-4.
What to put on your W-4?
The information you need to put on your W-4 depends on how much you want to withdraw from each paycheck and remit in taxes. If you want to avoid having to pay taxes at the end of the year and potentially rack up a large tax bill, you should use the IRS withholding estimate tool to determine how much you should have. withhold from every paycheck. Be sure to complete the multitasking worksheet, if applicable. Consider submitting additional deductions on line 4 (c) or reducing the number of dependents to make sure you don’t get met with a tax bill at the end of the year. Increasing your withholding will increase the likelihood that you will end up with a refund at tax time.
If you got a large refund last year, or if you’d rather get all of your money now and pay your taxes at the end of the year, consider using Form W-4 to reduce your tax burden. You can reduce the amount of taxes taken from your paycheck by increasing the number of dependents, reducing the amount of “non-professional” income or untaxed income that you record in your withholding on lines 4 (a) or 4 (c), or by increasing the deductions figure detailed in line 4 (b).
Are you claiming 0 or 1 on your W-4?
In previous years, W-4 forms included an option to have taxes automatically deducted from your paycheck or not. This was done either by not claiming an allowance and allowing the total amount of estimated taxes to be deducted from each paycheck by placing a 0 in the appropriate row, or by placing a 1 in the row, and then choosing how much you want to retain. of each paycheck.
From 2021, this section of W-4 is no longer relevant. The form has changed to use a more comprehensive formula for determining withholding tax. A W-4 with question 0 or 1 indicates that your employer is using an outdated W-4 form. However, you can still complete this form if requested. A 0 will result in additional withholding tax on each paycheck, while a 1 will allow you to earn more money if you want, although it could result in a tax bill at the end of the year if you hold back too much.
What do you put on W-4 if no tax is levied?
In order to qualify for exempt status, you will need to have no tax liability from the previous year and expect to have no tax liability for the current year. If you meet these conditions, you can tell your employer not to withhold federal tax from your paycheck by writing “EXEMPT” on line 4 (c).
Your employer will always withhold social security and health insurance taxes, regardless of your exempt status. In addition, your exemption will only last for one year. You will need to reapply for W-4 exempt status by February 15 of a given year in order to maintain that status.
How did you get more taxes taken from your paycheck?
In order to have more tax on your paycheck, indicate on the W-4 that you want your employer to withhold more money or update the form with new information that will result in a larger withholding. This can be done by indicating that you have fewer dependents than in a previous W-4 declaration. You can also submit more payroll deductions on line 4 (c), which will indicate to your employer that you want them to withhold more than they currently do.
How to make less tax on your salary?
You can also use Form W-4 to reduce your tax burden. To do this, decrease the number that affects your deductions. This includes the additional deductions shown in line 4 (c), as well as non-employment income identified in Form 4 (a). You can also submit a new W-4 if you have a new dependent, which will reduce your deductions.