How do I fill out (or help my employees fill out) a W-4?

So you got a new job - congrats! But there’s one more hurdle to getting your first paycheck: filling out a Form W-4.

What’s Form W-4?

Form W-4 is an IRS tax form used to document  your “withholding allowances” in order to calculate your federal income taxes. This is a fancy way of saying it will determine how much or how little is withheld from your wages for federal income taxes.

How do I fill it in as an employee?

The W-4 may look intimidating at first glance, but you will most likely know the answers to most or all of the questions it asks. Read the form carefully and answer each question. There will be numbers associated with your answers that you add up at the end. This final number is your withholding allowances. A lower number (like 0 or 1)  means more federal income tax will be taken out of your paycheck; higher numbers (2+) correspond to less tax being taken out. It is important to answer the questions accurately so that you can pay the right amount of income taxes. Too much and you’ll get a refund when you file your income tax return at the end of the year (no big deal), but deduct too little and you could owe additional taxes at the end of the year. Ouch! When in doubt, or if you’re nervous about over or under withholding your taxes, check with a certified tax professional to help you determine your correct withholding allowances.

Please note: If you live in a state with income tax (that’s all states except Alaska, Florida, Nevada, New Hampshire, South Dakota, Texas, Tennessee, Washington, and Wyoming), you may also need to complete a state withholding form. Click here for a list of the states and their acceptable forms. Read the instructions on each applicable form carefully as requirements vary by state.

I’m an employer - what about my employees’ W-4s?

If you don’t receive a Form W-4 from your employee, you are required to withhold as if they are single with zero allowances.

Encourage your employees to read the W-4 form carefully and do their best to fill it out. If they have questions about their W-4, they should consult with their own certified tax professional for help.

You do not generally need to send a copy of the Form W-4 for you or your employees to the IRS, however, in some cases the IRS may ask you to send them a copy for a specific employee, or they may send you a letter advising you of the maximum withholding exemptions for a specific employee(s). You must follow the instructions in these letters carefully, including complying by the required deadline, and providing your employee with a copy of the “lock-in” letter.   

Have more questions? Here is a list of FAQs about W-4s and withholding.

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