Filling out your W-4: Line by Line

By Peoples Tax | March 16, 2016
Posted in: Individual Tax

Anyone who has held a job has filled out a W-4. A W-4, or an Employee’s Withholding Allowance Certificate, is a form that helps your employer determine how much federal income tax to withhold from your paycheck.

The tricky part of filling out your W-4 is making sure the amount your employer withholds from your paycheck matches the amount you will pay in taxes that tax year. You want to avoid having too much or too little Federal income tax withheld from your pay. Having too much taken out could cause you to have less take home pay and perhaps a larger tax refund. Having too little taken out could result in a larger tax bill come tax time.

Here are some tips on making sure you claim the proper amount of allowances on your W-4.


Determining exemption

Exemption sounds like a pretty great thing but it’s not as great as it sounds. Just because you are eligible does not mean you are exempt from paying taxes, it just means you are exempt from having your employer withhold money from your paycheck. Claiming “exempt” when you don’t qualify is a common mistake made when filling out a W-4.

You can claim exemption from withholding for the current year only if both the following situations apply.

  • For the prior year, you had a right to a refund of all federal income tax withheld because you had no tax liability.
  • For the current year, you expect a refund of all federal income tax withheld because you expect to have no tax liability.


Determining allowances

The part that confuses most taxpayers when filling out a W-4 is determining the proper amount of allowances to claim. Most people assume you claim one for yourself and more if you have children. It’s not as simple as that. The more you claim, the less money is withheld; the fewer allowances you claim, the more of your salary is sent off to the IRS.

The IRS has a worksheet you can use to determine what your personal allowances should be. For some taxpayers this worksheet is not enough. Here are some tips to get you from line A-H!










Line A

Pretty self explanatory, if no one can claim you as a dependant and you are not claiming exempt, enter 1.

Line B

If you have more than one job, and your wages are more than stated, or if your wife is employed and her wages are more than the amount stated, you will need to skip this line and head over to the Two Earners/Multiple Jobs worksheet on page 2.

One common mistake made is when a taxpayer has a full-time job and a part-time job. The problem with the second job is that each employer will withhold taxes as if the employee only had one job. When the income from the two jobs is added together, the taxpayer is often in a higher tax bracket and will not have had enough taxes withheld for the higher income level. For this reason the taxpayer needs to adjust their withholdings to ensure an adequate federal/state tax is withheld to avoid a balance due.

Line C

Line C is where you could claim your spouse. Some married couples elect to claim 0 if both spouses work. Here’s a good rule of thumb:

Claim 0 if one or more of these apply to you:

  • You have a high income
  • You have no exemptions
  • You have no deductions
  • You are not eligible for tax credits

Claim 1 if one or more of these apply to you:

  • You have a lower income
  • You have exemptions
  • Your have deductions
  • You are eligible for credits (refundable and nonrefundable)

Line D

Enter the number of dependents (other than your spouse or yourself) you will claim on your tax return. Refer to this IRS Publication for determining who qualifies as a dependent.

Line E

If you plan to file as Head of Household, enter 1 for Line E. Head of Household can be claimed if you are unmarried and pay more than 50% of the costs of keeping up a home for yourself and your dependent(s) or other qualifying individuals.

Line F

This line is for parents or guardians who have at least $2,000 of child or dependent care expenses for which they plan to claim a credit. Child support payments should not be factored into this number.

Line G

This line is for parents or guardians who have children who qualify for the Child Tax Credit. See IRS Publication 972 to determine.

If your total income will be less than $70,000 ($100,000 if married), enter “2” for each eligible child; then less “1” if you have two to four eligible children or less “2” if you have five or more eligible children.

If your total income will be between $70,000 and $84,000 ($100,000 and $119,000 if married), enter “1” for each eligible child.

Line H

Line H asks that you add Lines A-G. If you plan on itemizing, you need to make sure you complete the Adjustments and Deductions worksheet. One of the most common mistakes taxpayers make is claiming too many exemptions.


You can make adjustments

The good news is, if you’ve claimed too many or too few exemptions on your W-4, you can make adjustments. We often discover W-4 mistakes when the tax preparer comes in to file their taxes – yet another reason you should have your taxes prepared by a tax pro this season! Have questions? Still need to file? Give us a call or make an appointment online.

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