How to Fill Out Your W-4 Form? Answers to FAQ About the W-4
If you’re filling out a Form W-4, you probably just started a new job. Or maybe you recently got married or had a baby. The W-4, also called the Employee’s Withholding Certificate, tells your employer how much federal income tax to withhold from your paycheck.
The form was redesigned for 2020, which is why it looks different if you’ve filled one out before then. The biggest change is that it no longer talks about “allowances,” which many people found confusing. Instead, if you want an additional amount withheld (perhaps your spouse earns considerably more than you), you simply state the amount per pay period. Here, we answer frequently asked questions about the W-4, including how to fill it out, what’s changed and how the W-4 is different from the W-2.
Why Do I Need to Fill Out Form W-4?
As just noted, the form tells your employer how much federal income tax to withhold from your paycheck. You’ll need to complete a new W-4 every time you start a new job. If your new company forgets to give you one for some reason, be sure to ask. If your employer doesn’t have a W-4 form from you, the IRS requires it to treat you as a single tax filer, which means withholding the highest possible amount from your paycheck for taxes. You can get back the amount you overpay, but only in the new year when you file your tax return.
You should complete the redesigned W-4 only if you started a new job – or if your filing status or financial situation has changed. You do not need to fill out the new form if you have not changed employers. Your company can still use the information provided on the old W-4 form.
Form W-4 changes for 2020
In 2020, the IRS released a new Form W-4 for 2020 with two key changes. The first is the form’s title. Form W-4 used to be titled “Employee’s Withholding Allowance Certificate.” But in 2020, that title was shortened to “Employee’s Withholding Certificate.”
And that title shortening is a result of the other key change to Form W-4. Prior to 2020, employees used W-4 to claim withholding allowances. The number of allowances determined how much income tax was withheld from each paycheck; employees who claimed fewer allowances had more tax withheld from each paycheck, while employees who claimed more allowances had less tax withheld each pay period. The value of these allowances were, in part, based on personal exemptions.
But a 2017 tax bill, the Tax Cut and Jobs Act, eliminated personal exemptions—and so Form W-4 also eliminated allowances. Now, instead of employees figuring out the right withholding allowances (which proved confusing for many), the new Form W-4 has employees fill in the relevant information to determine accurate tax withholding (like filing status, number of dependents, and additional income)—and then the employer does the calculations from there.
How to fill out a W4 form in 2020
Now that you understand what a W-4 form is, why it’s important, and the changes for 2020, let’s jump into how to fill it out. That way, you can guide your workers through the process—and make sure you have the information you need to accurately calculate their tax withholdings.
All employees must complete steps 1 and 5 on Form W-4. Steps 2, 3, and 4 only need to be filled out if they apply to the employee. Note: only employees hired in 2020 and beyond need to fill out the revised Form W-4. Employees hired prior to 2020 will have their withholdings computed based on their most recent Form W-4.
Step 1: Personal Information
Step 2: Multiple Jobs or Spouse Works
If your employee works other multiple jobs, they would check the box next to section 2(c) and complete the Multiple Jobs Worksheet. Depending on the number of jobs the employee and/or spouse holds, they can fill out the worksheet as follows:
If the employee has two jobs or they’re married filing jointly and their spouse also has a job, the employee should fill in Line 1 of the worksheet by using the withholding tables on page 4 of Form W-4, which have columns for the highest paying job on the left and the lowest paying job on the right. Employees should find their wages, cross reference the highest and lowest paying jobs, and enter the number at the intersection into Line 1.
Using the same process as we just covered for Line 1, employees should cross reference their highest paying job and second highest paying job and enter the number at the intersection into Line 2a.
Then, they should add the wages from the two jobs from Line 2a and use them as the “Highest Paying Job,” cross reference with their wages and salary from their third job, and enter the number at the intersection into Line 2b.
Once an employee has completed Line 2, they can move on to the rest of the worksheet. Just keep in mind that while employees should fill out a W-4 form for each of their jobs, they should only complete steps 3 through 4(b) for their highest paying job (they can leave those sections blank on their other W-4 forms).
Step 3: Claim Dependents
If employees have children under the age of 17, they should multiply the number of children by $2000 and enter it into the first box on the worksheet. For all other dependents, they should multiply by $500 and enter into the second box. Then, they should add the values from the first and the second boxes and enter the total into Line 3.
Step 4: Other Adjustments
- Line 4a: Other income (not from jobs). If your employee has additional income that isn’t subject to withholding (including interest, dividends, and retirement income), they can enter that income on Line 4a and elect to have the additional amount withheld from their earnings to compensate.
- Line 4b: Deductions. If your employee expects their deductions to exceed the standard deduction (which, for 2020, is $12,400 for single or married filing separately, $24,800 for married filing jointly, or $18,650 for head of household), they would fill out the Deductions Worksheet on page 3 of Form W-4 and enter the result on Line 4b.
- Line 4c: Extra withholding. If your employee wants to have additional tax withheld each pay period, they can enter the withholding amount on Line 4c.
Step 5: Sign the form