Let’s be honest, if you’re new to the workforce or are re-emerging after an absence, tax forms can be daunting.
The IRS has made a reputation for itself, and while you’re not going to be in as much danger as your imagination will lead you to believe, you want to be sure you’re doing everything right. That means, once you get a fresh W4 to fill out, a little guidance soothes the soul.
What Exactly Is a W4?
Excellent question. Your W4 will come from a new employer whenever you take a new job. Filling it out gives your employer the information they need to calculate how much money they withhold from your paychecks for tax purposes.
A lot of factors go into this: marital status, household size, dependents, and so on so forth. We’ll cover more of that later.
The W4 itself isn’t very long, around two and a half pages of relevant fill-in-the-blank information. You will need to hang onto this information once your employer sends back your W2. Everyone needs to file their taxes, and it’s a little complicated doing that if you don’t have your W4’s to light the way.
It turns out that every W4 does come with included instructions. These help explain what each category means, what you’ll need to fill out, and other helpful tips. But, like most legal documents, the language can be a little dense, confusing, and semi-misleading if you’re inexperienced. We’re here to help phrase it in a more easily understood manner.
Exemption Status for Taxes
Generally, if you only make less than around $10,000 or so, then you will likely not be tax liable. This is due to your personal exemption and standard deduction you can claim, meaning any chances of you owing money on your income is rendered moot.
Ultimately, exemption status means your employer won’t take cuts out of your paycheck to account for federal taxes. However, unless you’re making very little money in total, this won’t apply to you.
Get the Easy Stuff Out of the Way
Your first step is to remove the worksheets from the instructions. There’ll be a dotted line to help you know which part you’re expected to separate, including which to keep and which to send to your employer. Directly below the dotted line will be your name and address information. That should be pretty easy to do, so go ahead and knock that out now.
Quickly note the numbers that you see around the paper. There’s a one the boxes for your name, a two by your social security number box, and so on. Those are important for letting you know what relevant information goes where later. You’ll be calculating allowances, deductions, and other numbers that you’ll need to plug into multiple boxes. The sheet directs you where to go, but it’s easy to get lost.
Personal allowances is primarily based on your living situation and how you plan on filing your taxes. Everyone has to do it, and it’s pretty intuitive. If you live alone, and only have yourself to account for on your taxes, the only box you’re required to check off is the first one.
However, depending on if you’re married, how many jobs you have, whether you and your spouse both work, how many kids you have, and so on determines the amount of allowances you will have.
If you’re single with only one job, it’s easy. Things can get a little more hectic the more factors you have to consider, as each factor has a say in how many allowances you have. To clarify, allowances represent the deductions you’ll get.
More allowances mean less money taken out of your paycheck. Since allowance tracking can get tricky, the IRS has provided a calculator to determine accurate calculations.
To help break down what sort of allowances you’ll be applying for separate your life into numbers. If you’re a student who can still be claimed as a dependent on your parent’s tax return, then you’re at zero allowances. Once you become independent, and working a single job, and you aren’t married, that’s single with one allowance.
Being married and both partners are working means you’ll file separate W4’s that’s not to worry about. If you’re married and only you are working, however, that means two allowances, counting for both you and your partner. Then, if you have kids, that’s an allowance for each.
It’s basically counting the people you’re responsible for, including yourself and your family. Your W4 has more detailed information about what qualifications are needed to mark off each allowance. Don’t forget about that calculator, it’ll save you some trouble. When you account for everyone, write down the total in the “H” section, which accounts for all the number from “A” to “G.”
If you get your allowances wrong, don’t worry, you’re not in trouble. Your allowances are a guideline that inform the IRS how much money is owed. Staying on top of your allowances simply means you won’t be surprised when tax season rolls around. If you don’t claim enough allowances, then you might have to owe some money. If you put down too many, you might get a nice tax refund.
A part of knowing how to fill out a W4 means that mistakes are bound to happen every now and then. It won’t be the end of the world, and you’ll be able to fix them the next time around.
Deductions, Adjustments, and Additional Income
This is the second big segment you have to worry about on your W4. This is where most of the math comes in. The IRS lists on the W4 several itemized deductions you might have from the past year, including “qualifying home mortgage interest, charitable contributions, state and local taxes (up to $10,000), and medical expenses in excess of 7.5% of your income.”
That seems a little wordy. To simplify it, if you had anything big happen to you that you can deduct, this is the place for that. For instance, if you made big contributions to charity, had expensive hospital bills to pay, or a lot of taxes already spat out, that’s the sort of stuff you’re looking for. For the most part, this is stuff you would have needed to keep record of to ensure you have the right estimate.
If you want this process to be a bit easier, then you can opt out for the standard deduction and settle it there. However, if you had big expenses that need to be taken into account regarding your taxes, it’s worth it to go through the trouble. Remember that calculator from earlier? It helps with this part too.
When you’re filling out this section, the important thing to do is go through it line by line. Keep it slow, steady, and make sure your math is right. So long as you refer to the calculator and double-check the Publication 505 to ensure you’re accounting for all your deductions properly, you’ll be fine.
If you’re single and you only work one job, congratulations! You’re done, and you can pack up your W4 and send it off. However, not all of us are so lucky. For instance, if you live in a household where there’s more than one person earning an income, this part is for you. We’re not forgetting you single people who work multiple jobs either, you’re included in the final leg of the race.
Thankfully, on tiers of knowing how to fill out a W4, this one’s pretty easy to figure out. You’ll need to reference back to earlier parts of your sheet, such as line 10 on the Deductions, Adjustments, and Additional Income portion. The IRS has also provided tables for you to help fill out every line past line one.
The purpose of this part of the process is to determine how much extra income will be withheld from your paycheck when taking other earning household members into account. It’s primarily fitting other numbers into their appropriate fields, like puzzle pieces. It’s all basic math, and as long as you refer to the tables and earlier parts of the W4, you’ll be fine.
How to Fill Out a W4 - Don’t Panic and Keep Calm
In the immortal words of Douglas Adams: Don’t panic. While the W4 looks like a confusing mish-mash of numbers, fields, and jargon, that’s all first glance.
The best way to deal with your W4 is to take your time and read through it line by line. This guide is your friend, and it combined with all the powers of the internet will help you through.
You’ll know how to fill out a W4 in no time at all.