Form W-4: Employee's Withholding Certificate
Completed by employees to tell their employer how much federal income tax to withhold from their paycheck based on filing status, dependents, and other adjustments.
Overview
Form W-4, Employee's Withholding Certificate, tells your employer how much federal income tax to withhold from your paycheck. When you start a new job or experience a life change (marriage, divorce, new child, additional income), you should complete a new W-4 to ensure the correct amount of tax is being withheld.
The W-4 was significantly redesigned in 2020 to eliminate withholding allowances and instead use a more straightforward approach based on income, deductions, and credits. The new form asks about your filing status, multiple jobs, dependent credits, other income, and additional deductions to calculate the appropriate withholding.
Getting your W-4 right is important. If too little tax is withheld, you could owe a large tax bill and potentially an underpayment penalty when you file. If too much is withheld, you're giving the government an interest-free loan and will receive a large refund, but you'll have less money in each paycheck throughout the year.
Who Files This Form?
All employees must complete Form W-4 when starting a new job. You are not required to file a new W-4 every year, but you should update it whenever your personal or financial situation changes. Common reasons to update your W-4 include getting married or divorced, having a child, starting a second job, receiving income from other sources, or buying a home.
You do not file the W-4 with the IRS — you give it to your employer. Your employer uses the information to determine how much federal income tax to withhold from each paycheck. Independent contractors do not complete W-4; they use Form W-9 instead.
Key Fields
Step 1: Personal information and filing status
Your name, address, SSN, and filing status (single/married filing separately, married filing jointly, or head of household). This determines your base withholding amount.
Step 2: Multiple jobs or spouse works
Used if you have more than one job or your spouse also works. Helps ensure enough tax is withheld across all jobs.
Step 3: Claim dependents
Enter the total amount of dependent credits you expect. $2,000 for each qualifying child under 17, $500 for other dependents.
Step 4a: Other income
Income not from jobs that you expect to receive (interest, dividends, retirement income). Adding this ensures enough tax is withheld.
Step 4b: Deductions
If you plan to itemize deductions or claim above-the-line deductions that exceed the standard deduction, enter the excess here to reduce withholding.
Step 4c: Extra withholding
An additional dollar amount to withhold from each paycheck. Useful if you want to increase withholding to cover other tax obligations.
Filing Deadlines
No direct penalty for the form itself, but incorrect withholding can lead to underpayment penalties on the tax return.
Step-by-Step Instructions
- 1
Complete Step 1 with your personal information and filing status.
- 2
If you have multiple jobs or your spouse works, complete Step 2 using one of three methods: the online estimator, the multiple jobs worksheet, or the checkbox (simplest for two similar-paying jobs).
- 3
In Step 3, enter your expected dependent credits. Multiply qualifying children under 17 by $2,000 and other dependents by $500.
- 4
In Step 4a, enter any other income you expect that is not from wages (investment income, rental income, etc.).
- 5
In Step 4b, if your deductions will exceed the standard deduction, enter the excess to reduce withholding.
- 6
In Step 4c, enter any additional amount you want withheld each pay period.
- 7
Sign and date the form, then give it to your employer's payroll department.
- 8
Use the IRS Tax Withholding Estimator (irs.gov/W4App) to check your withholding mid-year and adjust if needed.
Common Mistakes to Avoid
Not updating W-4 after major life changes
Marriage, divorce, new children, second jobs, and other changes affect your tax liability. Update your W-4 promptly to avoid surprises at tax time.
Both spouses claiming dependents on their W-4
If married filing jointly, only one spouse should claim dependents in Step 3. Claiming on both will result in too little withholding.
Not accounting for multiple jobs
If you or your spouse have multiple jobs, complete Step 2 on the W-4 for the highest-paying job. Without this, not enough tax will be withheld.
Claiming exempt when not eligible
You can claim exempt from withholding only if you had no tax liability last year and expect none this year. If you're wrong, you'll owe the full tax plus possible penalties.
Frequently Asked Questions
Update your W-4 whenever your tax situation changes: new job, marriage/divorce, new child, significant income change, or if you received a large refund or owed a large amount. You can update it at any time.
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