How to fill out an IRS Form W-4

Form W-4 is an IRS form that you fill out to tell your employer how much money should be withheld from your paycheck for federal taxes.

If your employer asks you to complete this form but you don’t know how to do it, don’t worry, here we’ll show youhow to fill out a W-4 form step by step.

What is the Form W-4?

As we said before, the form W-4 is an IRS document that you fill out to indicate your tax situation to your employer. The information provided on this form allows your employer to withhold the correct federal income tax from your paycheck.

When you get a job, you are required to fill out a W-4 form, in which you must provide personal information including your address, social security number, marital status, monthly income, etc.

Once you complete this form, your employer will withhold the appropriate amount from your wages and send it to the IRS. These payments will count toward your annual income tax bill that you calculate when you prepare your tax return for the following year.

Why do I need to fill out a Form W-4?

All tax residents of the United States must report their income to the IRS and pay taxes. Although some types of income are exempt from taxes, when you work as an employee and earn more than certain amounts, you will almost certainly have to pay taxes on your income to the federal government.

In order for your employer to withhold the correct amount of tax from your income, you must file a Form W-4. This document provides the necessary information related to your tax situation for your employer to determine how much federal income tax to withhold from each of your paychecks.

What changed with the new W-4 form?

In 2020, the IRS implemented some changes to the Form W-4 in order to reduce the complexity of the document and increase the transparency and accuracy of the withholding system.

Although it uses the same underlying information as the previous design, the new design replaces complicated worksheets with more straightforward questions. This way, employees can more easily determine how much money should be withheld from their paychecks.

How to fill out Form W-4 step by step

Filling out a W-4 form is very simple and you only have to follow these five steps to determine your withholding:

1.    Provide your personal information

The first step when filling a W-4 form is to complete the personal information requested. This includes your name, address, social security number (SSN), and marital status. This information will be used to determine your standard deduction and the tax rates your employer must use to determine your paycheck withholding.

2.    Declare other income

The next step is to provide information about other income that contributes to the household’s monthly income. This section only applies to people with a spouse, who must declare that they have more than one income.

Skip this step if you are single, do not have a second income and do not file a joint return.

3.    Add dependents

If you have children, you must enter the number of children or other dependents in this section to determine the amount of the child tax credit and credit for other dependents that you can claim when you file your federal tax return.

4.    Add other adjustments

This section is optional and allows you to indicate other reasons for withholding more or less of your paycheck. You can include any of the following items to adjust your W-4 withholding:

  • Other estimated income from interest, dividends or retirement.
  • Other deductions you plan to take in addition to the standard deduction to reduce your withholding.
  • Any supplemental withholding you want for each paycheck.

5.    Sign and date Form W-4

The final step is to sign and date the W-4 form at the bottom of the document. By signing Form W-4, you represent that all information provided throughout the document is correct and accurate.

Frequently Asked Questions

How often should I update my W-4 tax form?

The IRS recommends updating your Form W-4 every year. Updating your W-4 form is especially important if there has been a significant change in your life that could impact your taxes, such as a new job, divorce, marriage, or a new member of the family unit.

Do I need to use the new W-4 form?

If you previously completed a W-4 form for your current job and it is in the system, you don’t have to complete the new form, unless you need to update the information.

However, if you are completing this form for the first time, or completing it for a new job, the IRS requires that you use the new form.

How can I claim allowances?

The new W-4 form design does not include an option to claim allowances. However, you can indicate it in section #3, doing a very simple calculation: count the number of dependents you have, and then multiply it by USD 500 or USD 2,000, depending on their ages.

Where can I select backup withholding?

If you owe more taxes than you receive in salary, you must declare additional withholdings. To do this, you must indicate the amount you intend to withhold in section C of step #4.