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When go to work for “the man,” you will be expected to fill out a Form W-4. This is a form provided by the IRS that helps employers figure out how much money should be taken out of each paycheck and sent on to Uncle Sam. The way you fill out your W-4 determines how much of your paycheck is withheld. And how much of your paycheck is withheld determines how much money you owe in April, or how big of a refund you get back ^[3].

For many, the sweet spot is figuring out the withholding so that you don’t owe a lot of money come tax time, but also so that you don’t have a huge refund, which is tantamount to giving the government an interest-free loan. The idea is to get yourself as close to 0 as possible. If you want to adjust your withholding ^[4] to better reflect your tax liability, all you have to do is fill out and turn in a new W-4.

How Do You Fill Out the Form W-4?

Filling out your Form W-4 is fairly straightforward if you work through it methodically, and read the instructions. You will need to fill out information about your name, address, Social Security number, and filing status (married, single, etc.). Once you have that information, you can fill out the applicable worksheets to determine your allowances. The more allowances you have, the lower your withholding amount will be. You claim allowances for yourself, and for your spouse and dependents (if applicable). If you claim no allowances, the highest amount of tax possible at your income level will be held aside.

There are three worksheets that come with the Form W-4 that can help your employer figure out how much to withhold:

1. Personal Allowances: This is fairly straightforward, asking you to enter numbers for each allowance. You get 1 for yourself, and 1 for your spouse. You can also get an extra allowance if you are married, but there is only one job for the household, if you are single with only one job, or if the wages from your second job (or a spouse’s job) are $1,500 or less. Other personal allowances include number of dependents that you have (enter a 2 if you have two children, or a 3 if you have three), filing as head of household, $1,900 in dependent care expenses (not including child support), and eligibility for the child tax credit. Simply fill the numbers in as you go down the list. You add them up at the end to get your final allowance result. Most people are done once they fill out this worksheet.
2. Deductions and Adjustments: If you itemize your deductions, this worksheet can help you further adjust your withholding by going through the process on this worksheet. This will boost your total allowances. Realize, though, that once you get to 9 allowances, your employer may be required to send your W-4 to the IRS for review. As long as everything’s above board, though, it shouldn’t be a problem.
3. Two-Earners/Multiple Jobs Worksheet: Use this worksheet if you have more than one job, or if you have a spouse that works too. The point of this worksheet is to figure out an additional withholding in order account for these jobs. If you fall into this category, you should fill claim allowances only on one W-4. Your best option is to figure it using the highest-paying job. W-4 Forms for additional, lower paying jobs should be filled out with 0 allowances so that the highest tax is taken from those jobs, since the higher paying job is attached to the allowances.

Once you have the information you need from the worksheets, you can complete your form. If you are exempt, you can show that you won’t have tax liability, and nothing will be withheld. Otherwise, you need to put in your total number of allowances on line 5. This will come from Line H on Worksheet 1 or from the appropriate line on one of the other worksheets. Next, you decide if you need to withhold an additional amount. If there are multiple earners, this information will come from that worksheet. You can also decide to withhold an extra amount for your own purposes.

(Photo: booleansplit ^[5])