What Is Form W-4?
Form W-4, or the Employee’s Withholding Certificate, tells employers basic information about their employees’ tax filing status, dependents, and expected deductions. These details help the payroll team determine how much money to withhold from an employee’s pay for federal income tax.
The amount withheld depends on the employee’s filing status, dependents, income, and adjustments.
Form W-4 vs. Form W-2
Form W-4 is different from Form W-2, which summarizes an employee’s annual earnings and payroll deductions.
What Employees Need to Know About Form W-4
Your employer will ask you to complete a W-4 when you first start a new job. You use this form to indicate your filing status, dependents, and other adjustments based on your personal tax situation. After you complete it, the form goes to the payroll department. Using the form, the department calculates your federal income tax withholding, deducts it from your gross pay, and sends the amount to the IRS on your behalf.
You may amend your W-4 if a major life change affects your filing status. For example, you may need to review your W-4 if you get married, separate from your spouse, have a child, withdraw funds from a retirement account, or receive pay from a non-job source.
What Employers Need to Know About Form W-4
As a business owner, payroll manager, or other company representative, you send Form W-4 to any new employees for them to fill out before they get their first paycheck. Once they complete it, they return it to you to keep in your records. Neither you nor the employee files Form W-4 to the IRS.
You will use the employee’s input on Form W-4 to calculate federal income tax withholdings. You’ll withhold the proper federal income tax from your employee’s earnings and submit it to the IRS every quarter.
The IRS expects your organization to accompany the payment with Form 941 (Employer’s Quarterly Federal Tax Return). Smaller businesses with less than $1,000 in tax withholdings can opt for annual filing using Form 944 (Employer’s Annual Federal Tax Return).
The W-4 form is only for employees. If you’re an employer requesting tax information from a freelancer, contractor, or vendor, use Form W-9. It collects details you’ll need when it comes time to prepare their Form 1099-MISC or Form 1099-NEC.
How a W-4 Form Impacts Your Refund
Accurately completing the W-4 helps avoid surprises when you file your annual federal income tax return. If your employer doesn’t withhold enough income tax, you may owe an additional liability and underpayment penalties when you file your individual income tax return on Form 1040. Overwithholding results in a bigger refund, but it also means less money in your paycheck during the year.
Carefully review each line of the Form W-4 for 2024 and think about how it applies to your situation. You might look at your previous year’s tax return to check your filing status and any credits you claimed. This information can help you fill out the form.
If you have a life change or expect money from a new earnings source, remember to account for those when you complete the form.
Should You Have More or Less Taxes Withheld?
It depends on your preferences. Some taxpayers prefer to have more money withheld because they look forward to having a large refund check. Others prefer to have the money available throughout the year, meaning they’ll have less money in their refund check.
Here are some factors that affect how much money is withheld from your paycheck for taxes:
- Number of dependents: Claim fewer dependents to have more taxes taken out, but claim more dependents to have fewer taxes taken out.
- Deductions: Claim more deductions in Step 4(b) to have fewer taxes taken out, but claim fewer deductions to have more taxes taken out.
- Other changes: Lower the numbers for other income and extra withholding in Steps 4(a) and (c) to have fewer taxes taken out.
When Was Form W-4 Last Revised?
The last major revision to the W-4 occurred in 2020 when it moved away from the traditional allowance system. The allowances were based on the number of personal exemptions you could claim on your tax return, but the Tax Cuts and Jobs Act (TCJA) of 2017 got rid of personal exemptions.
As of 2020, the amended form requests additional information from taxpayers. The information may improve withholding accuracy since it considers whether a person holds more than one job, has other income sources, or expects to itemize their deductions.
The IRS updates Form W-4 and its instructions when necessary to reflect changes in tax laws and regulations. Usually, the changes are very minor.
In the 2024 W-4 form, a new note in Step 2(a) advises taxpayers to use the IRS app if they hold more than one job or if a spouse works. That’s not a requirement, and it’s still possible to calculate extra withholding yourself without the app.
How to Fill Out Form W-4 as an Employee
You may want to review the previous year’s tax return before completing the W-4 form. Consider any other details that might affect your income this year, too, such as earnings from any non-job or self-employment sources.
Remember, the W-4 gives you an opportunity to set yourself up for the right withholdings during the tax year. Accurately completing the form may prevent any unexpected surprises when you fill out your annual return, so it’s well worth the effort.
1. Share Personal Details
Steps 1(a) through (c) request your name, Social Security number, address, and taxpayer status. Enter those details in the appropriate area.
You can always double-check your previous year’s tax return to confirm your taxpayer status. If you haven’t had any life changes (marriage, divorce, spouse death, or change in dependents), it’s likely the same.
2. Consider Multiple Jobs/Spouse Work
If you earn income from a second job or have a working spouse and file jointly with them, review the information in Step 2. It asks you to estimate the total income from all these jobs. Sharing your expected total income from each source improves withholding accuracy.
You have three options to choose from. Pick the one that aligns best with your tax situation:
- Use the IRS online estimator. This is the best option for taxpayers with self-employment earnings.
- Complete the Multiple Jobs Worksheet. It starts on page three of the W-4 form for 2024.
- Check the box in 2(c). The IRS advises checking the box if your earnings from a second job are less than half of what you earn at a higher-paying role.
If you use the first or second option, you may need to provide an extra withholding amount in line 4(c). This is the additional tax your employer withholds for each pay period.
3. Claim Any Dependent Credits
Do you have any children or other dependents you financially support? If so, you may be eligible for dependent-related credits on your tax return, like the child tax credit.
This section helps you calculate the total of your credits so your employer can apply them to your tax withholdings on your paycheck.
Generally, the full $2,000 child tax credit is an option if your kids are:
- Age 17 or younger
- Live with you for over half the year
There are annual income limits that apply. If your total income is $200,000 or less, or $400,000 if you file a joint return, you may qualify for the full credit. It starts to phase out for earnings above these thresholds.
You may be able to claim a $500 credit for dependents who live and financially rely on you but don’t meet the child tax credit criteria. If there are any other credits you believe apply to you, you may enter their total in Step 3.
4. Indicate Other Adjustments
Step 4 is a catch-all for any other income or deductions that may apply to your tax situation. The IRS doesn’t require you to complete this section—it’s entirely optional. If you decide to fill it out, use these tips.
In Step 4(a), enter any non-job income you expect for the year. Examples include Social Security, interest, and dividends.
The next line applies if you itemize your deductions rather than take the standard IRS-provided amount. There’s a separate Deductions Worksheet on page 3 of the W-4 to help you calculate the total and apply it to the form.
In Step 4(c), list any extra tax you want withheld from your paycheck by your employer. Know that additional withholding may reduce any tax you owe at year-end or increase your refund.
5. Sign Form W-4
Step 5 includes a space for the employee and employer to finalize the form. If you’re an employee completing it, review all the information in Steps 1 through 4. Once you’re sure it’s accurate, you can sign and date it.
Employers enter their business name and address and Employer Identification Number (EIN) in the “Employers Only” section. They can also input the employee’s first day of work.
Special Considerations for the W-4 Form
Certain situations may require extra thought when filling out your W-4, as your choices can directly impact your paycheck and tax liability.
Employees Wanting to Claim an Exemption
There is no deadline to submit a W-4 form unless you want to claim an exemption from federal income tax withholding. You may qualify for an exemption if you didn’t owe any federal taxes for the previous tax year and don’t expect to owe any this year.
According to the IRS, the deadline to request an exemption is February 15, 2025. If you provide your employer with an updated W-4 by that date claiming your exemption, it won’t withhold any federal taxes from your paycheck. Keep in mind that you may incur taxes and penalties if it turns out you do have a liability for the year.
To claim an exemption, complete Steps 1(a) and 1(b). In the line below Step 4(c), write “Exempt.” Then, sign and date the W-4 in Step 5.
Students and Part-Time Employees
If you’re a student or part-time worker who doesn’t expect to earn much income for the year, you may not owe much in tax. The lowest tax bracket is 10%, and if you’re eligible for any deductions or credits, your liability may be close to zero.
Employees Who Started in the Middle of the Year
Do you expect to work less than 245 days during the tax year? If so, you may request your employer to use the part-year method for your withholdings. Using this method results in less income tax withheld from your paycheck.
Retirees
If you’re a retiree who receives a regular pension or annuity payment, you may need to complete a W-4P. The form helps the payer calculate the right income tax withholding for your retirement earnings.
Legal Considerations
Completing Form W-4 is uncomplicated for the average employee, and the employer’s withholding obligations tend to be straightforward. But if you have any concerns about the form and how you should select your withholding preferences, consider speaking with a tax or legal advisor for guidance.
How LegalTemplates Helps
While LegalTemplates doesn’t offer tax advice, we provide a step-by-step PDF editor for IRS tax forms, including the W-4. Employees can easily fill out their W-4s with their specific information and withholding preferences. Then, they can save and print them to share with their employers.
Frequently Asked Questions
Can I claim myself as a dependent?
No. You can only claim children or a qualifying relative as a dependent. The IRS doesn’t allow you to declare yourself a dependent on your tax return.
How do I fill out W-4 if I’m married and we both work?
You’ll want to pay careful attention to Step 2 of the W-4. Use the IRS estimator or Multiple Jobs worksheet to determine whether extra withholding applies.
If there are only two jobs between you and your spouse, you may check the box in Step 2(c). Keep in mind that Step 2(c) is most accurate if one job earns less than 50% of the other one. Only complete steps 3 through 4(b) for the highest-paying job, not all the jobs between you and your spouse.
What is the default withholding if no W-4 is filed?
If an employee fails to file a W-4, the default withholding is single with no other adjustments, which could lead to higher withholding.
Should I claim 0 or 1 on the W-4 form?
The revised W-4 eliminates the old system of claiming dependents through allowances. The new form requests taxpayers to select their status (single, married filing separately or jointly, head of household, or qualifying surviving spouse). Step 3 of the form lets you add any children or other dependents you support financially.
