How To Fill Out A W4 Form – The Right Way – 2022

IRS For W4 – Employee’s Withholding Certificate

Purpose of the form – To tell your employer how much federal withholding tax to withhold from your pay.

Up until a few years ago, this form was pretty simple. Now, for most people, it’s a disaster.

How to fill out a w4 form or how to fill out w 4 form has had thousands of searches every month. That tells you that employees do not get good help from their HR representatives nor can they understand the form.

To really know how to fill out the w4, you have to know your objectives for your taxes.

1.) Do you want a big refund
2.) Are you ok with oweing
3.) Do you want to just break even

Planning for number 1 & 2 is easy. The break even is difficult and requires trial and error.

Here are the items on the form and how they effect your amount of withholding:

Taxpayer Status:

Single/Married Filing Separate – Has the highest amount withheld
Married Filing Joint – is less based on married people getting a lower rate – but be careful. They cannot really take into account your spouses income and most married couples end up getting burned by this
Head of Household – has the least withheld

Number of dependents (children)

The less number of dependents – The more withheld

More dependents – Less withheld

Items not on the form That Can Effect You:

The size of your pay – yes size matters! I find that people who work a lot of part-time jobs or make anywhere under $20,000 per year have trouble because the withholding tables do not pick up their paycheck and they get very little withheld. This can be a problem if their spouse earns a lot more. The spousal income will make the smaller income be taxed at a higher rate.

How To Fill Out The W4

Fill out Section 1 – Easy

Section 1c – If you are single or Married Separate – Check that box

If you are Married and you want a refund – Check the Single Box

If you are married and want to owe or break even – Check the Married Box

If you are head of household and want to get a refund – Check Single

If you are head of household and want to owe – Check head of household

BE CAREFUL – Head of household is a single person who has a child or other dependent. Some people say they are head of household meaning they are in charge! True story!

Disclaimer – These are my recommendations after 46 years of doing taxes. Results are not guaranteed.

Skip Section 2 – This only works in cases where all income lines up exactly for spousal income and multiple jobs. I have no idea how this can be even close to being accurate.

Fill in Section 3 – This is where the fun begins.

The number of dependents does not necessarily equal the number of children you have.

The number of dependents effects the amount withheld. For example, I have a client with 2 children. Together they make around $125,000.

If they were to fill out married and 2 dependents, they would owe money.

So, I advised them to file it married and 0 dependents.

If you want a bigger refund and have children, claim 0 children.

If you want to break even or owe money, claim more children.

Oweing money to the IRS is not bad. In fact, the amount of time it takes to get your money back is a bit crazy.

You can use that money during the year and stash some to cover what you will owe.

Filling out the w4 form can be a bit of trial and error. A lot of factors come into play when doing it. If you have a clear result for your tax outcome, it will make filling out the w4 form easier.

You can download the form here

Cheers
Steve