Key takeaways
You must fill out Form W-4 when you start a job with a new employer or when you experience a major life event, like a marriage or the birth of a child.
Only two sections of the W-4 are required: the personal information section and the signature section.
The remaining sections are optional but can help you find the right balance between owing too many taxes at the end of the year and receiving a too-large refund.
Filling out paperwork can be tedious, especially tax forms like the W-4, but it doesn't have to be overwhelming.
Employers use your W-4 to determine the amount of federal tax to withhold from your paycheck. Providing accurate information helps you avoid any major surprises when tax season rolls around. Withholding too little can leave you owing more in taxes than you thought. On the other hand, withholding too much can result in a refund.
At first glance, a W-4 can read like a lot of tax terminology that you wouldn't use in daily conversation. But with short, manageable steps, completing a W-4 can be a breeze. Follow along to figure out how to fill out a W-4.
The elements of a W-4 form
In 2020, the IRS updated the W-4 form to simplify the process for employees and increase the accuracy of tax withheld.1 Now, there are only five sections instead of seven – and only two sections are required, while the rest are optional.
Here are the main elements of a W-4 form:
Personal information
Filing status
Information about secondary jobs or a spouse's job
Information about your dependents
Signature
How to fill out a W-4 form step-by-step
Here is a handy primer for filling out the revised form:
Step 1: Fill out your personal information, including your name, Social Security number, and tax filing status. Check the box that corresponds with your situation: single, married and filing separately, married and filing jointly, qualifying widow or widower, or head of household.
Step 2: Complete this section if you have more than one job, or if you're married and filing jointly with with one spouse as the main breadwinner. Here's what to do:
Fill out steps 2 through 4(b) on the W-4 form for the highest-paying job only. Keep those sections blank on the other jobs' forms.
For joint filers earning a similar salary, check the box at line 2 (c) on not one but two W-4 forms, for both jobs. Otherwise, more tax than necessary might be withheld.2
Step 3: Next, you can claim dependents and additional credits. If you make $200,000 or below – or under $400,000 as a jointly filing married couple – follow the instructions and multiply the number of qualifying children by $2,000 as well as other dependents (maybe your senior parent who lives with you) by $500. Add that number and fill in the section's third line. The IRS has more information on who is eligible for dependency in Publication 501. You can add those to the grand total in line three. This can boost your paycheck in the near term but may reduce your chances of receiving a tax refund after you file your tax return. You can also opt out of claiming dependents on your W-4 if you want more taxes taken out so you have a smaller tax bill on tax day.3
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Step 4: In this section, you can enter non-job income and itemized deductions to decrease your withholding. You can also add student loan interest using the deductions worksheet on page three of the W-4. And in step 4(c), you can enter the additional tax that you want withheld each pay period. Short-term, this will lessen your paycheck – but ultimately trim your annual income tax bill.2
Step 5: Sign and date the form, then give a physical or online copy to your colleagues in charge of collecting W-4 forms.
What to consider when filling out a W-4 form
Before you get started, take note of these steps and strategies below to possibly save time and money.
You are required to fill out a W-4, also known as the "Employee's Withholding Certificate," when beginning a new job. This form tells employers how much federal tax to withhold from your paycheck.
If you're switching jobs, you need to fill out and submit a new W-4 with your new employer.
You may also want to re-file your W-4 to ensure that your withholdings reflect a big life change, such as having a baby, buying a home, or receiving a raise at work.3
If you worked no more than 245 days during the calendar year you can ask your employer to use the part-year withholding method to reduce the amount of money withheld from your paychecks.3
Tax season, but make it painless
Now that you have the steps for completing a W-4 and the factors to consider for your withholding, you can fill yours out with confidence.
Since the IRS requires individuals to pay income taxes over the course of the year, try to fill out your W-4 accurately so you don't get hit with a surprise tax bill.
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