The Form W-4 that you complete for your employer provides vital information about how much money to withhold from your paycheck. By claiming the proper number of allowances, you can get your tax withholding to closely resemble your actual tax liability. Most people can use the standard Personal Allowances Worksheet, but in some cases, you also should complete additional worksheets to ensure the appropriate amount is withheld from your paycheck. Though you can claim fewer allowances than you are entitled to so that you receive a large income tax refund, you should not claim more because you will have too little withheld, resulting in additional tax penalties.
Enter "1" next to lines A, B, C, E and F on the Personal Allowances Worksheet on Form W-4. On line D, enter the number of dependents you claim. On line G, enter the number of allowances for the Child Tax Credit.
Add the numbers on line A through G on line H to find the total number of allowances you can claim. However, if you may need to complete the Deductions and Adjustments Worksheet if you plan to claim larger tax breaks or the Two-Earners/Multiple Jobs Worksheet if you work multiple jobs or are married and both spouses work.
Complete the Deductions and Adjustments Worksheet to figure out if you are entitled to additional allowances based on the deductions and credits you claim. If you get a larger number of allowances with this worksheet, you can claim the larger amount to get more accurate tax withholding.
Complete the Two-Earners/Multiple Jobs Worksheet if you work multiple jobs or both you and your spouse work. This form will tell you the amount of additional withholding you need per pay period rather than adjusting the number of allowances you claim. For example, if you complete the Two-Earners/Multiple Jobs Worksheet and get $100, you would need $100 extra of withholding each pay period, so you should report $100 on line 6 of Form W-4.
- IRS.gov: Topic 753 - Form W-4 – Employee's Withholding Allowance Certificate
- IRS.gov: Tax Withholding
- Internal Revenue Service. "Topic No. 753 Form W-4 – Employee's Withholding Allowance Certificate." Accessed Dec. 7, 2019.
- Internal Revenue Service. "Tax Trails - Can You Claim Exemption from Withholding on Form W-4?" Accessed Dec. 7, 2019.
- Internal Revenue Service. "Publication 501 (2018), Dependents, Standard Deduction, and Filing Information." Accessed Dec. 7, 2019.
Based in the Kansas City area, Mike specializes in personal finance and business topics. He has been writing since 2009 and has been published by "Quicken," "TurboTax," and "The Motley Fool."