This is not tax or financial advice. This is simply meant to aid you in filling out a form. Please seek help from a professional tax consultant when filling out your own W-4 form or any other tax form.
Starting a new job? Having a kid? You will likely be asked to fill out a new W-4 form upon starting the new year – or even at any time during the year.
This is the standard form employers use to obtain the necessary information to report your income to the government—and unfortunately, to take out your taxes and Social Security/Medicare tax (“FICA”), too. But unlike most tax forms, filling out a W4 isn’t actually that hard. It’s a simple one-page form with limited fields, and most can do it on their own without the help of a tax professional.
However, the form gives you a little bit of control over how your taxes are collected, so a little guidance doesn’t hurt. And that’s why—in this article—we’ll show you step-by-step instructions for how to fill out a Form W-4 for 2021.
Below we’ll break up the process into sections. Each section shows you the basics of how to fill out the tax form, and ensure that you have the proper amount of money taken from your hard-earned paycheck every month.
W-4 Form Basics
As discussed earlier, W-4 forms are generally collected when you first start a job, or if you need to change your filing status. Some things that affect filing status include marriage, a new child(ren), or other major life changes. However, you’re legally allowed to submit a new W-4 tax form whenever you’d like.
Changes to this form may reflect on your tax withholding, either raising it or lowering it. On the other hand, if you don’t submit a W-4 form in the first place, you’ll have a surprise on Tax Day: you may be taxed as a single person with zero tax withholding allowances—the highest tax rate.
The good news is that it will likely result in a large tax refund. But the bad news is you’ll have less net income throughout the year than you would have, had you completed Form W-4 with the proper filing status and number of allowances.
Your boss must update your tax withholding to reflect your W-4 form changes within 30 days of receiving it, so you may want to update your form after reading through this article. Your employer is not required to submit the form to the IRS, but they must retain it for a minimum of four years. It will be used so that you will have taxes collected accordingly.
Think of the W-4 form as a worksheet of sorts. As you go through the list, you’re essentially finding tax deductions for yourself. Make sure to read each line fully and consider which deductions you’re eligible for.
When filled out properly, you’ll have the right amount of tax taken out of your paycheck. This also means a smaller tax refund—but don’t worry, this is a good thing. Instead of giving the government a free loan, you’re now able to take money that would otherwise be tied up and invest it or pay down your debts. Nice, right?
So without further ado, let’s take a look at how to properly fill-out your W-4 tax form for the 2022 tax year.
How To Fill Out Your 2023 W-4 Tax Form
Before we start, grab a copy of the W-4 tax from the IRS’ website. Once you have a copy, start reading the guide. We’ll break the form down line-by-line and discuss how to minimize your taxes taken from each paycheck.
Step 1: Enter Personal Information
Start by filling out your personal info in Step 1, Lines (a) through (c).
Step 2: Multiple Jobs or Spouse Employment
You’ll need to complete this section only if you have more than one job, or your spouse is also employed. If neither situation applies, you can skip this step.
But if either applies, you’ll need to jump down to Page 3 of the W-4 form, and complete Step 2(b) – Multiple Jobs Worksheet. However, be aware that completing this section only helps you to better estimate your tax liability as a result of having a second job. You’ll still need to complete a W-4 form for each job you or your spouse hold.
For the moment, let’s assume either situation applies – multiple jobs or your spouse works.
Line 1 of the multiple jobs worksheet (Two jobs) can be used if you either have two jobs or you’re married filing jointly, and your spouse also has a job. On this line, you’re going to refer to the schedule below from Page 4 that will provide you with a value to enter on this line that blends the higher paying job and a lower paying job.
Let’s assume you earn $100,000 per year, and your spouse earns $50,000. Go down the table below, on the left side of the page, and find $100,000 (which will be the $100,000 to $149,999 range). Then go to the columns to the right, and find $50,000 (which will be the $50,000 to $59,999 range).
There are separate tables if you are either single or married filing separately or head of household.
Where the two intersect on the chart, the value is $9,320. That’s the amount you’ll enter on Step (b) – Multiple Jobs Worksheet, Line 1.
To keep things simple, we’ll make the assumption that you don’t have three jobs between you and your spouse. We can skip Line 2.
Jump down to Line 3 (we’re still on the multiple jobs worksheet), and enter the number of pay periods for the year for the highest-paying job. We’ll assume 26 pay periods.
On Line 4, you’ll divide the amount on Line 1 ($9,320) by Line 3 (26 pay periods). The net result will be $358. You’ll enter that amount on Line 4 of the worksheet, but also on Line 4(c ) – Extra Withholding, on Page 1 of the W-4.
Now that we’ve taken care of the multiple jobs issue, let’s get back to Page 1 of the W4.
Step 3: Claim Dependents
Unlike in the past, there are no longer any personal exemptions that apply to members of your household, including your children. But if you have dependents, under age 17 by the end of the year, or other qualifying dependents, you’ll be eligible for Child Tax Credit or Credit for Other Dependents, which are worth up to $2,000 or $500 respectively, per dependent.
You can only claim this credit if your income is $200,000 or less for singles or $400,000 or less for married filing jointly.
Carrying our example forward, you and your spouse have a combined income of $150,000. If you have two children who will be under the age of 17 by the end of 2021, you’ll be entitled to a credit of $4,000 (2 X $2,000). You can enter $4,000 on Page 1, Line 3.
Step 4: Other Adjustments (optional)
As the heading of this step indicates, completion of this section is optional. But as Step 4 indicates, it can be used for any of the following three circumstances:
If you want tax withheld for other income you expect this year and won’t have withholding, enter the amount of other income here. It includes interest, dividends, and retirement income, but you may also use it to have extra withholding from a small amount of self-employment income or anything similar. For our purposes, we’ll assume there is no additional income.
Use this line if you expect the claim deductions in excess of the standard deduction, and want to reduce your withholding. You can make that determination using Step 4(b) – Deductions Worksheet shown below. This calculation can be a bit tricky if you itemize deductions. You’ll have to make an estimate of your 2021 itemized deductions, then subtract the standard deduction for your filing status. Also, you can enter an estimate for student loan interest, deductible IRA contributions, and certain other adjustments on Line 4 of the worksheet. You’ll then add those numbers together, as well as move the total to Line 4(b) of W-4 Page 1.
Line 4(c) is a catch-all line allowing you to add any additional withholding for any other purpose.
For our example, let’s assume you’ll itemize your deductions for 2021, with an expected amount of $35,000. That will result in $10,200 ($35,000 in itemized deductions, less $24,800 for the standard deduction) being entered on Line 3 of the worksheet above. We’ll also assume both you and your spouse will make traditional IRA contributions totaling $12,000.
Line 5 of the worksheet will show $22,200, which will also be entered on Page 1, Line 4(b).
With the information we’ve calculated in our continuing example, W-4 Page 1 will look like this:
- Line 3 will show $4,000 for the Child Tax Credit.
- Line 4(b) will show $22,200 in Deductions (for itemized deductions in excess of the standard deduction, plus IRA contributions).
- Line 4(c ) will show $358.
Step 5: Sign & Date the W-4 Form
The final step – Step 5 – will require you to sign and date the form. Your employer will complete the employer information required at the bottom of the form.
And that’s all you need to do. As you can see, Form W-4 for 2021 looks a lot different than the form has in previous years. The object of previous editions was to determine a certain number of exemptions to claim – 0, 1, 2, 3, 4, etc. Now the object is to arrive at a dollar amount by which your income will be adjusted in calculating the necessary withholding tax.
Remember, your employer already has the income information from your primary job available for calculation purposes. With the W-4, you’re really just apprising them of any adjustments that will need to be made, reflecting either upward or downward adjustments in your employment income.
Finally, I recommend you always ask a tax professional if you have questions on your W-4 form or any other tax document. A small fee upfront is better than owing the IRS fees or back-taxes years down the road.