What Is a Form W-4? How to Fill Out a Withholding Certificate for Employees

A W-4 form, also known as a "Employee's Withholding Certificate," is an IRS form that instructs employers on the amount of tax to withhold from each paycheck. Employers utilize the W-4 to compute and send certain payroll taxes on behalf of employees to the IRS and the state (if applicable).

If your employer already has a completed W-4 form on file, you do not need to complete a new one. Also, you are not required to fill out a new W-4 in 2023, like every year you did. If you begin a new employment or wish to change your withholdings at your current work, however, you will likely need to complete a new W-4. In either case, it is an excellent reason to examine your withholdings.

How to complete a W-4

Here is how to complete the applicable procedures for your circumstance.

Step 1: Personal details

Include your name, address, SSN, and tax filing status.

Step 2: Account for numerous jobs

If you have many jobs or file jointly with a working spouse, follow the rules for more accurate withholding.

Steps 2 through 4(b) of the W-4 must be completed for the highest-paying employment. Leave these sections blank on the W-4 forms for any other employers.

If you are married and filing jointly and both of your incomes are about the same, you can tick a box stating this. Both spouses must check this box on their W-4 forms.

If you do not wish to disclose to your employer that you have a second job or other non-employment income sources, you have many options: You can direct your employer to withhold an additional amount of tax from your paycheck at line 4(c). Alternately, do not include the additional income in your W-4. Instead of having taxes automatically deducted from your paycheck, you should transmit anticipated tax payments to the IRS.

Step 3: Claim dependents, including children

If your total income is less than $200,000 (or $400,000 if filing jointly), you can multiply the number of children and dependents you have by the credit amount. (See the regulations regarding the child tax credit and when you can claim a dependant on your tax return.)

Step 4: Modify your withholdings

You can indicate if you want more tax withheld or anticipate to claim deductions other than the standard deduction when filing your taxes.

Step 5. Sign and date the W-4 form

Sign the completed form and submit it to your employer's human resources or payroll department.

What to consider when completing Form W-4

The W-4 form has been modified.

Previously, employees may claim allowances on their W-4 to reduce the amount of federal income tax taken from their paychecks. The greater the number of withholding allowances that employee claimed, the less their employer withheld from their paychecks. However, the Tax Cuts and Jobs Act of 2017 revised several tax regulations, including the elimination of personal exemptions.

In response, the IRS revised the W-4 form.

The new W-4, which was released in 2020, will continue to request basic personal information but will no longer request a number of permits. Those who wish to reduce their tax withholding must now either claim dependents or utilize a deductions worksheet.

2. Indicate if you are excluded from tax withholding.

If you are exempt, your employer will not withhold federal income tax from your paycheck. (However, Social Security and Medicare taxes will still be deducted from your check.) In general, you can only be excused from withholding if two conditions are met:

You received a refund of all federal income tax withheld since you had no tax liability last year, and

You anticipate the same outcome this year.

Write "exempt" in the field below step 4 if you are exempt from withholding (c). You must still finish steps 1 and 5. Additionally, you must submit a new W-4 each year if you intend to continue claiming exemption from withholding.

File a new W-4 form when living circumstances change.

You can modify your W-4 at any time, but if any of the following occur during the year, you may wish to update your W-4 so that your withholdings reflect your current tax situation:

  • You either marry or divorce.
  • You are a parent.
  • You purchase a home.
  • You either take a wage reduction or receive a substantial boost.
  • You only work a portion of the year.
  • You have considerable dividend income.
  • You or your spouse are self-employed.
  • Become used to playing with your withholdings.

Tinkering is OK. You may provide your employer with a fresh W-4 at any time. That means you may complete a W-4 form, submit it to your employer, and then examine your next paycheck to determine the amount of money withheld. Then you can estimate how much you will have deducted from your paychecks for the entire year. If it does not appear to be sufficient to pay your whole tax burden, or if it appears to be far too much, you can submit another W-4 and modify.

On lines 4(a) and 4(c) of Form W-4, you can enter an extra fixed amount withheld from each paycheck to cover taxes on freelancing income or other income.