Claiming Exemptions—the W-4 for Dummies

w4 for dummies

 


I’ve been getting a lot of questions about how many exemptions to claim on the W-4 (Employee’s Withholding Allowance Certificate) form that you give to your employer.  People look at the whole 2 page form and get intimidated.  For most people—you should just ignore the rest and concentrate on the little part at the bottom of page one.  That’s the part in this screen shot up above.   It will make your life a whole lot easier.

 

First, some questions:

 

I claimed the wrong number of exemptions on my W-4 and now its tax time and I’m going to claim a different number of exemptions.  Will I get in trouble for this?


No you won’t.  Your employer doesn’t report you to the IRS for not claiming the right amount of allowances.  The worst that will happen is that you owe a lot at tax time or get a big refund.  (Actually I don’t think of getting a big refund as being a bad thing.  Probably shouldn’t call it a “worst case scenario.”)  Neither of those things are crimes.  It’s possible that the IRS could inform your employer to increase your withholding if the withholding on your W2 is not enough to cover your tax liability.  I have never seen that happen to anyone—but the IRS is allowed to do that if they think it’s necessary.

 

I don’t want any tax taken out of my paycheck.  Can I just claim EXEMPT?

 

No you can’t.  Exempt is only for people who will have no tax liability at all.  You might have gotten a refund last year, but it doesn’t mean you have no tax liability.  Generally, someone with no tax liability makes less than $5,950 for the entire year.    For most people, claiming EXEMPT is a really bad idea.

 

Okay, so what should I claim? Good question.  Here’s my suggestion list.  See what category fits your best.

 

You are a student, either in high school or in college.  You’re not married and you don’t have kids.  Your parents are allowed to claim you on their tax return (you’re under 24 years old.)  SINGLE, ZERO ALLOWANCES


You’ve got a job, only one job, you’re living on your own, and you’re single.  SINGLE, ONE ALLOWANCE


Now if you have a child, add another allowance for each child.  For example, let’s say you’re single with 2 kids, you’d claim single 3 allowances; one allowance for you and one for each of the children.

 

Single like above but you’re working two different jobs, SINGLE, ZERO ALLOWANCES – because the two jobs kick you into a higher tax bracket than the withholding would show.

 

You’re married and only one person works:  MARRIED, TWO ALLOWANCES


You’re married and you both work—you’ll each have your own W-4 and they will be different

 

Spouse #1 with higher paying job—claim MARRIED and all the allowances for the family

 

Spouse #2 with the lower paying job—claim MARRIED BUT WITHHOLD AT HIGHER SINGLE RATE, ZERO ALLOWANCES


Now this is a pretty simplified guide, but it’s much easier to understand than what is on the form.  I also find that people are less likely to get into tax trouble with my rules than when you follow the allowances worksheet.

 

If you want a really good, accurate calculator to figure your proper withholding, the IRS has one on their website.  The problem is, as I’m posting this—the calculator is down.    You can use this guide for now and you can always tweak your withholding later when it’s back up.  Here’s the link:  http://www.irs.gov/Individuals/IRS-Withholding-Calculator

490 thoughts on “Claiming Exemptions—the W-4 for Dummies

  1. Hi Jill,
    Your husband may be claiming 3 exemptions because he’d like a bigger refund. Or, maybe you have some other income and he withholds extra to cover that tax. Those are both really good reasons for not claiming all of the exemptions you’re entitled to. Since your income will be in addition to your husband’s income, I suggest that you claim zero exemptions, married, but withhold at the higher single rate. After you’ve received a few pay checks – it sometimes takes awhile for your pay to normalize out in a new job – you can run the numbers through the IRS withholding calculator to check to make sure you’re on track.

  2. Hi Monique,
    The standard accountant answer is: “it depends”. Sorry about that. And you’re probably right, maybe. Here’s the thing. I remember my niece a few years ago. I’d say her income was low. She only claimed 1 exemption on her W4 and she wound up owing taxes. She was single, a student, living with her parents, and had no children. She should have claimed zero.
    On the other hand, people with kids who don’t have a working spouse might be able to claim 9 exemptions because of the earned income tax credit. So it all depends upon your situation.

  3. I am an international student eligible to work—does being international make a difference? I am a college student working during summer quarter, enrolled in one class, working two jobs—one on campus, one off campus—both part time. I am single (not married), live in a dorm. And I am under 24 years old (but I’m not entirely sure what the “parents can claim my tax return” part means).

    Should I claim exempt?

    Sorry, I think you’ve done a wonderful job explaining it—it’s just a complicated process to understand. I really appreciate this!

  4. Hi Jenna,
    As an international student your situation is unique. First, what type of Visa do you have? I’m guessing it’s F1 or J1. If that’s so, then you’re considered to be a non-resident of the United States. You’ll be filing a different tax return altogether: the 1040NR.

    Then the next question would be – what country are you from? If you were from India, I’d put single with 1 exemption on your W4 since India’s tax treaty with the US makes the taxes almost the same. Some countries have no treaties and your tax status is worse – for one thing you don’t get a standard deduction. And some countries have better treaties and you might not be subject to tax at all. (Rare- but I throw that out there just in case.)

    So yes, being international makes a difference. So, most likely you’ll wind up paying tax on any income you earn in the US. (Especially on the off campus job – even if you have a great tax treaty, that off campus job at a regular American company is most likely getting taxed.) I would claim single with zero exceptions on both jobs.

  5. Hi Jenna,
    I am married and I just had our 2nd child. I have the higher income between my husband and I. We are confused as to who should claim what? My husband just started a new job. Should he claim 0 and I claim 2, 3, or 4? I’m not sure which is best to do? We’d like to have some what of a return if possible.

    Thanks for your help!

  6. hello i have 2 kids and at #1 i claim the kids and job #2 i claim the kids. the kids father also claim the kids on his paycheck. but only i will claim the kids on tax time. are we doing this correctly or should we do some adjusting?

  7. I am recently divorced and my wife has custody of the 3 kids we have and will be claiming them on her taxes. I have put 1 exemption on my W-4 since I am single with single job, is this correct? I do not pay alimony, only child support and not sure how many exemptions I should put down, but don’t want a big tax bill at the end of the year?

  8. Hello, my wife and I are in the 25% tax bracket. Right now on our w4’s we are claiming, Single and 1 and Single and 0 and withhold an extra $230(higher pay job). We are about to switch with who has the higher paying job. We are also expecting twins in a few months, which will expand our family to a size of 4. We dont want to owe any taxes at the end of the year but we also want more money on our paychecks now. How do you suggest we proceed with making adjustments to our w4’s? When counting allowances, do I count 3 (wife and twins), or 4,(me, wife and twins)?

  9. I claimed 3 on my tax form but I was told if I claimed 1 on, my tax refund will be higher. I am a seasonal h2b visa worker, can I change this or is it too late.

  10. My husband is starting a new job as a police officer. There are 3 people in our house (including him) and I do not work. We are both students (not sure if that makes any difference). What should he claim on his W4? Can he claim 9 for low income? He will be working for a small town for about $13 an hr. We don’t want to owe. Thank you.

  11. Hello –

    My husband and I both work full-time and do not have children. He earns more than I. We’ve always both claimed 1 exemption each, but I’m wondering if that’s correct moving forward. Any input is appreciated, thanks in advance.

  12. I am married…We just got a mortgage (our first home–for 7 months out of the 12 this year), qualified for MCC home credit, have one child, take out at least 3% for retirement, and we donate 10% of our gross income to charity. How much can I claim to almost break even? Or to maximize our net income but avoid paying. We used to both claim 0 and got back > $5000- $8000 each year.. but we want that money now rather than later since we have the mortgage now.

  13. Hello, A few of our son”s friend’s are working for us this summer. They are 17 and 18 yrs. old and all students. Can they file exempt or should be single and 0 ?

  14. Hello!
    I am married with 2 kids and my husband has been the sole provider this year….I just got a job and will be making more than him….I am not sure how either of should complete our W-4

  15. I am single making a new salary of $41,000 per year. That just started June 26th. I have 1 child living with me and my fiance (not married), is disabled. I currently have claimed 1 through my employer for my taxes. What should I claim from here on our to avoid owing taxes and ensure that I get a decent refund?

  16. Can you claim 99 and married or just flat 50. I heard some guys do this to get more money. Than later on change it back. Thank you have a great day

  17. So I ran the calculator and it stated I have 10 allowances. That’s seems extremely high. Basically it is me, my wife, and 1 child under a year. I am currently claiming 2 but I was wanting to raise that to 3 or 4 and see if I was still safe.

  18. Also, do I need to worry about claiming my military retirement? It is Combat-Related, and is awarded as tax-free/tax-exempt.

  19. Hi Lauren,
    Congratulations on the new baby! The best thing is to use the IRS withholding calculator, but barring that, I’d definitely have your husband claim 0 exemptions, married but withhold at the higher single rate. Then you claim married with 3 exemptions – hopefully giving you a little refund.

    But – that’s a complete shoot from the hip. I don’t know how much either of you make! That’s why going to the IRS withholding calculator is really a good idea.

  20. Hi ikimberly,
    If you and the father are not married, then he should not be claiming the kids on his paycheck as he’ll be filing as single with only one exemption. Also, if you are working two jobs, you should probably only claim the kids on one – maybe neither. If your income is low and you qualify for EIC, then it’s probably okay to claim them at both jobs. But if you’re making enough to not get EIC, then you should take the kids off of at least one job (if not both, depending upon your income.)
    If you and the father are married, then you need to look at your combined income. I’m still thinking that one of you should be taking those kids off of your paycheck to avoid having to pay taxes.
    Once again, I’m recommending using the IRS withholding calculator to get a handle on this.

  21. Hi John,
    I think claiming single with 1 exemption is the way to go for you.

    Now, your divorce decree may allow you to claim an exemption or two. In that case, you may even want to claim 2 exemptions. But I wouldn’t claim more than that. There are always so many issues with divorces and exemptions – at least your behind will be covered if there’s a fight. Then, if you manage to get a refund – well, you’ve got money to put into savings, retirement, or maybe a vacation. But at least you’re not having to dish out extra next April.

  22. Hi Ace,
    Congratulations on the twins! How awesome!

    Okay, I really think you, more than anybody else, need the IRS withholding calculator. You’re already in the 25% bracket and you’ve got the duo income. And, you know that you’ve had to withhold extra before. Although I think the twins will fix that situation for you!

    So go grab both of your paychecks. Go to the IRS link, you will be claiming married filing jointly with 2 dependents. Plug in your paychecks and tax return information and go from there. I’m guessing that you will be claiming married with 4 and she will be claiming single with zero. (You could claim 3 just to be safe.)

    But I agree with you, it’s time to get a little more money into your take home pay now – gotta go buy that baby furniture! Good luck!

  23. Hi Charity,
    If your husband’s job is the only income for your household for 2016, then it looks like you won’t have any tax liability for the year. So he could go ahead and claim 9 exemptions. If he’s never owed taxes, he might even be able to claim exempt (I hate claiming exempt, but I think in his case it would be okay.) Good luck, and tell him to be careful out there!

  24. Hi Joy,
    If you and your husband have both been claiming 1 exemption and it’s working out just fine – then keep doing it. You’ve probably heard the old saying, “If it ain’t broke, don’t fix it.” That’s pretty solid advice.

  25. Hi Rose,
    The IRS withholding calculator is your best tool. It looks like you’re going to be able to claim about 5 exemptions between the two of you (maybe you claim 2, your husband claim 3 or vice versa), but the withholding calculator will give you a more accurate figure. And congratulations on the new home!

  26. Hi Daphne,
    Personally, I prefer single zero. For a lot of kids, exempt is just fine, but if they make over $4,000 then the taxes kick in and I hate having a kid have to write a check come April.

  27. Hi Jessica,
    Congratulations on the new job. I’m thinking you might want to put “married but withhold at the higher single rate” with zero exemptions.

  28. Hi Christy,
    If you want a nice refund, then why no continue claiming one exemption? And what do you consider to be decent? I’m thinking that you could probably claim 2 exemptions and still have about a $1,000 refund.
    Now, let’s talk about your fiancé. You say he is disabled – does he work at all? If not, then you might be able to claim him as a dependent also. Basically, he’d have to make less than $4,000 a year for you to be able to do that. Just a thought.

  29. Hi Jan!
    My wife and I file married, jointly and live in Florida Her income is app. $65k /yr and mine is $98k /yr and we have two children that are shown as dependents on our return. My wife currently claims one and since I just started my new job I planned to claim 2. I simply do not want to pay tax next year, we got slammed last year in having to pay because I mistakenly claimed a higher allowance than 2. I was given the advice that claiming 2 (and wife 1) should be ok to not owe or receive a small refund. Is there truly a way of knowing whether or not we would have to pay tax come tax time? Ive been out of work by the way for 18 months so essentially just starting now in July 2016 means I would have taxable income from now until December. Would sincerely appreciate your advice, there are so many people saying different things… Thanks so much! Kind rgds, Jacques

  30. Hi Julio,
    Yes, I see people doing that all the time. I also think it’s a bad idea. Here’s why – if you aren’t going to owe any taxes – well then that’s fine. 99 is a little bit of an overkill but it keeps your employer from taking any taxes out.
    But here’s the problem – if you’re going to have any tax liability – then you haven’t paid anything in. And I find that guys who say they’ll change it back – often don’t. Then they’ve got a big problem at tax time.
    So I recommend, go to the IRS withholding calculator, figure out what you really should be withholding so that you don’t get a refund, but get the most out of every pay check. It can save you a world of hurt later.

  31. Hello,

    I could really use help here. My husband is currently out of work and probably will be for a while. He is having some issues. I am working full time and we have an infant. Can I claim a 3 since my husband does not work or can I only claim a 2 for my child and myself? I need more money in my paycheck since his unemployment is done and he are going to be struggling.

    Thank you,
    Jaimie

  32. Hi Patrick,
    Thank you for your service to our country!

    So my first thought it – Hmmm – 10 exemptions does seem a bit high – but then again, maybe you would qualify for EIC so that could make a huge difference.

    Basically, you would get 1 exemption for you, another for your wife, one for your child – that’s 3. Then another for the child tax credit – so 4, and another for filing jointly so that would be 5. Now, if you’ve only been claiming 2 or 3 so far this year, you could be doing some “make up” non-withholding so that could account for the 10.

    That said, I’m going to give you a completely different withholding calculator, it’s from the Kiplinger people. Here’s the link: http://www.kiplinger.com/tool/taxes/T055-S001-tax-withholding-calculator-kiplinger/index.php

    I personally prefer the IRS one, but since the IRS one gave you 10 exemptions – try this one, just for a comparison. It’s very different, but this is much easier to use. See what they say.

    One thing I worry about with claiming 10 exemptions – I’m guessing that it would be okay for half the year, but then you’d need to switch back to 5 in January. And – if you forgot to switch – then you’d wind up owing for 2017. So, just remember that you’ll need to readjust your withholding if you go as high as 10.

    Now – about your military pension. most military pension is taxable on your federal return. (In a lot of states it’s tax free.) A disability pension is not taxable, and neither are VA benefits. So make sure you know for certain about the taxability of your military pension. I don’t want you to get burned there. Active duty combat pay isn’t taxable – but the retirement pay usually is.

  33. Hi Jacques,
    Congratulations on the new job. My biggest concern for you and your wife is that your combined income puts you in a higher tax bracket. You see, your wife by herself is in the 15% bracket. You, by yourself, are still pretty much in the 15% tax bracket. But your combined income kicks you into the 25% bracket. So if you’re making 98k – than it’s like all of your wife’s income is at 25%.
    It won’t be bad the first year as you’ll only have half a year of income. But you’ll need to adjust for 2017 for sure.

    You’re a perfect candidate for the IRS withholding calculator. Start with claiming 2, and after you’ve gotten a few paychecks (the first one is always weird, wait for the third check to do this) fun your checks through the calculator and see what it says. Remember to make proper adjustments for your salary as you’re only working half a year. You can always tweak your withholding if it’s not enough.

    Then you’ll want to adjust for 2017 come January. Then I’d probably have you claim 2 exemptions and have your wife claim zero but withholding at the higher single rate to cover for your higher tax bracket.

  34. Hi Jaime,
    I’m sorry your husband is out of work. I know how stressful that can be. For you, I’d put 5 exemptions for now. You can always cut back once your husband is working again. If he had tax taken out of his unemployment, claiming 5 shouldn’t hurt you come tax time. If he didn’t have tax taken out – then maybe only claim 4 exemptions.
    I’m saying 5 because one for you, 1 for your child, 1 for your husband, 1 for the child tax credit, 1 for the Married filing jointly status since he’s not working. Good luck!

  35. Question! I’m getting a bonus and I don’t want to pay tax on it! What would I change my W4 to so I do t have to pay taxes for that one paycheck? I am married with no dependents to claim! Thanks!

  36. My fiancé is getting taxed an awful lot! We are not married we have two kids and we both work. He claims 1 I believe or zero what should we be claiming in this situation???

  37. Hi Sheryl,
    So for the one check, change your W4 to 20 exemptions. That outta do it. But don’t forget to change it back. But remember – you’ll still have to pay tax on the bonus come April.

  38. Hi Stacey,
    Something doesn’t sound right. I suggest going into a tax office and having someone take a look. It used to be that H&R Block would do a free review of your tax return. If he’s claiming 1 or zero, I would think he’d get a refund with 2 kids.

    If he did get a nice refund, but it’s just that there’s a lot of tax taken out of his paycheck, then I’d say he can increase the number of exemptions he claims.

    He might be a good candidate for the Kiplinger withholding calculator. Try this link: http://www.kiplinger.com/tool/taxes/T055-S001-tax-withholding-calculator-kiplinger/index.php This might be easier for you to use.

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