Kip Tips

How to Fill Out a W-4 Form

Cameron Huddleston

Understand the basics of this IRS form that determines how much federal income tax is withheld from your paycheck.

I remember when I got my first job and was handed a W-4. I had no idea what it was or how to go about filling out the IRS form. For starters, the whole "allowance" thing threw me off. As far as I was concerned, an allowance was something my parents gave me for doing chores when I was a kid.

SEE ALSO: How to Adjust Your Tax Withholding

I'm sure plenty of people just entering the workforce, and even quite a few experienced workers, have the same thoughts as they fill out a W-4 form. So let's go over the basics:

Why do I need to fill out a W-4? The information you provide on the form helps your employer figure out how much federal income tax to withhold from your paycheck.

How do I know if I'm exempt from withholding? Your employer isn't required to withhold for federal income tax if you had no tax liability the previous tax year and expect to have no tax liability for the current tax year. If that's the case, simply fill out lines 1, 2, 3, 4 and 7 of your W-4 and return the signed form to your employer. Don't neglect to do this. Without a W-4 on file, an employer is required to withhold at the highest rate.


How do allowances work? The number of allowances that you claim determines how much your employer will take out of your check each pay period to cover federal income tax. The more allowances you claim, the less tax will be withheld.

So on the W-4 Personal Allowances Worksheet you can enter a "1" on line A for yourself if no one such as a parent or guardian can claim you as a dependent on their W-4 forms. Then on line 5 on the actual W-4 form, you can enter a "1." However, you'll be given the option to claim more allowances based on your marital status, employment situation, number of dependents and other factors. The question is whether you should claim more allowances. Just keep in mind that while you are permitted to claim fewer allowances than you're entitled to, the IRS doesn't allow you to claim more than you're entitled to.

I don't want to pay a lot of taxes, so shouldn't I claim as many allowances as possible? Not necessarily. You can, for example, have less tax withheld by claiming an additional allowance if you're single and have only one job (or if you're married, have only one job and your spouse doesn't work). But if you don't pay Uncle Sam during the year, you'll owe at tax time in April. Owing a little is fine, but owing a lot can wreak havoc on a tight budget. Workers who are single and have no dependents will probably get their tax withholding right by claiming "1" allowance.

If you claim "0" allowances, though, you might very well have too much withheld and get a fat refund in the spring. It sounds tempting, but you'll have had less money to spend during the year, and you'll be giving the government an interest-free loan by letting it withhold too much from each of your paychecks. Our easy-to-use withholding calculator can help you figure out if too much is being taken out of your paycheck.

Finally, remember to fill out a new W-4 and submit it to your employer (not the IRS) when your personal circumstances change. A marriage, divorce or birth of a child can have a big impact on how much tax you could and should have withheld. The good news is that the revision will take effect as soon as your next paycheck.

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