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

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

  1. Hi Dd,
    I’m guessing that you wages for the time period would have been $915. Here’s why I think that. If you have claimed 10 exemptions, your company probably isn’t taking out any federal income tax withholding. But even without income tax withholding, you would still have to pay your social security and medicare care. Social security is 6.2%. Medicare is 1.45%. Together, that’s 7.65%. So, if you made $915 you’d take 915 time .0765 and you’d get $70. (Okay it’s 69.9975 and I rounded up.) So you did get most of your check, you just had your social security and medicare taken out.
    But let me ask you this – why are you claiming 10 exemptions? Do you have that many deductions? You said you’re single, so I’m guessing you don’t have any children to claim on your tax return. It’s easier to pay a little out of every pay check then it is to come up with all that tax money in April – just sayin’.

  2. Hi my name is dd. And i have a question maybe i filled out my w4 wrong. I filled out my form single with 10 dependants but the state took 70 out still, so shouldnt i have got back most of my check. Please help me understand

  3. Hi Zachary,
    The W4 instructions say claim 1 for yourself, and claim another 1 if you are single and only have one job. So claiming 2 is actually okay. I don’t like claiming 2 because it’s cutting if really close and I find that people who claim 2 usually owe. That’s why I always recommend claiming 1. But claiming 2 should be fine – unless you have other income or another job.

  4. Hi Kori,
    The year’s almost over so you’ll find out if you have a problem or not. It’s possible that you’ll be just fine, but it all depends upon how high your income actually it. Normally, I would have your husband claim married with 5 exemptions and you claim married but withhold at the higher single rate with zero exemptions. If you’re afraid of a balance due, take both you and your husband’s latest paystubs and go to the IRS withholding calculator. It’s a pretty good tool and it will tell you how much you’re going to owe in April. IRS Withholding Calculator

    It’s possibly you’ll be fine, but depending upon your situation, you could wind up with a balance due. Using the calculator, you’ll know now, and can sock away some money before April.

  5. Hi Stephanie,
    If you file separately, then it makes sense for both of your W4s to be “married but withhold at the higher single rate” and 1 exemption.

  6. If I am divorced but my ex has custody of our child, and will be claiming her as a dependent, can I still claim 2?

  7. I am married we both work and have two kids. He makes more then me. We both claimed 3 exemptions on our w4. What should i have claimed? I dont want to habe to pay taxes.

  8. Hi, my husband makes more money than I do. But we file our taxes separately and we do not have any kids. How should we fill out our W-4?

  9. Hi Caroline,
    Yes, that would be correct – for now. I’m not sure how the new tax law is going to affect the W4s, but for now, that would be correct. If the law changes, we’ll probably all have to update our W4s, but as things stand today, 8 is about right.
    Personally, I prefer to go 7 instead of 8, just because I like a little bit of a refund, but that’s me.

  10. I am single with two kids. I am head of household. My income will be less than 70,000. I entered info like this
    A: 1
    B: 1
    C: 0
    D: 2
    E: 1
    F: 0
    G: 3
    Leaving me with a total of 8 for line H. Does that sound correct to you?

  11. Hi Len,
    Congratulations on your marriage! Since she is married to you, you may file as married filing jointly. Since she had no income in her home country – that will not be a problem, and it should be to your advantage tax-wise because you will get the higher standard deduction, and extra exemption, and the lower MFJ income tax rate.
    On your W4, I recommend that you claim Married with 2 exemptions.

  12. Hi Sam,
    So if your spouse has the higher income, then for you, you should skip the a, b, c lines and go straight to the bottom. You will claim married but withhold at the higher single rate, and claim zero exemptions. Your wife will claim all of the exemptions, including the child tax credits, etc. Your income is “in addition” to her income, so all of your income is taxed at the highest tax bracket. That’s why you need more withholding.

  13. Hi Jan, my wife came to the US 1 month ago with K-1 visa, we got married a week after that. She does not work in her home country and neither here. We are in process to apply for her Green Card (AOS). I am US citizen with 1 job (53K yearly salary). Now I go to change my W-4, should I pick: Single, Married, or Married but withholding at higher single rate? And how may allowances should I put? (I have been filling out as Single, 1 allowance). Thanks,

  14. Ok, trying to fill this out. Married with 3 kids. Spouse has higher income and we fall in the low end of the tax brackets. How do I figure this? I keep following the instructions but feel like the number I come up with is really high. I do get Child Tax Credits so this is the part of the instruction that confuses me. What do I enter?

  15. Hi Jeff,
    It’s probably a good idea to switch to single 0 for now. After the first of the year, you can probably go to single with 1 exemption. You didn’t mention children, but if you claim single with 1 exemption you should be fine – then if you do get to claim a child – then you should get a refund. But it’s so hard to count on claiming kids unless they actually live with you. So claiming 1 is your best bet after the new year.

  16. Hello-I am recently divorced and currently have my W-4 withholding listed as Married “0” and am questioning if I should go to my W-4 withholding as Single “0”? Thank you.

  17. In a situation where me and my wife both work, and we work at the same job, making the same exact pay, what should we claim?

    Someone please help.

  18. Hi Nasir,
    Classic accounting answer – it depends. Your wife is on an F1 visa – that means that for tax purposes, she would file as a “Non-Resident Alien”. But – she’s your wife. What is your tax status? Are you a resident alien? If yes, then you two could elect to have her taxed as a US resident because she is your wife.
    It probably makes sense for you to file jointly – but I don’t know all of your details. For example, if she made money in your home country – you might not want to file jointly – because the US taxes your world wide income if you are a resident. That would be a good reason for her to retain her status as a Non-Resident.
    My recommendation is to get some professional help with your tax return. As far as your W4 goes, I would claim one allowance for you. For your wife, I’d claim zero for now. You can always adjust that later after you’ve filed your taxes for 2017 and done a little planning for 2018.

  19. Hello,

    My wife is on an F1 visa (haven’t applied for her green card yet), and she worked this year as an intern for two semesters (made about $8500 total or so), should I file as MFJ or MFS? And how many allowances should I (or both if we do MFS) claim (in the sense of best tax practices without owing too much or waiting for a big refund from the IRS)?

    Thanks in advance.

  20. Hi Tom,
    If you don’t claim your child as an exemption, and you are not the custodial parent, 6 exemptions is way too high. I’d claim 2 at the max, more likely one. If you’ve been claiming 6, you should go to the W4 calculator with your last pay stub and last year’s tax return to figure out how much extra you need to be withholding to avoid a balance due in April.

  21. i am claiming 6 exemptions as a Single, unmarried, One income person with one child. It feels like i have to many exemptions. Should i be claiming head of house if i wont be claiming my child as a dependent come tax time?

  22. Hi David,
    You will probably be fine claiming Single with 2. You can always go to the IRS withholding calculator to be sure, but you’re probably going to be okay.

  23. Hi Juanita,
    In your situation, you don’t want any refund. You basically want to owe a little at the end. If you are single and have a child, you can probably claim 4 exemptions, maybe even 5. Although I’d hate for you to owe too much, since you just filed for bankruptcy, you don’t want to have tax debt on top of it. The best bet for you is to use the IRS withholding calculator. It will figure your tax right down to the dollar. In your case, any extra withholding you have is lost money, so I’d use the IRS calculator. It’s your best tool.

  24. Hi Brittany,
    It sort of depends upon who is going to claim the baby. Is your boyfriend the father? If he is, he would also have a legal right to claim your baby on his taxes. If he is not the father, than only you may claim the baby on your taxes.
    If your boyfriend is claiming your baby, then you will put single with one exemption on your W4. If you are claiming your baby, then you would claim single, with 4 exemptions.

  25. Hi LeAnna,
    That’s a huge question! And the answer is: it depends. So, how much withholding do you want? For example: you could withhold nothing, and pay your share of taxes though estimated tax payments. Or, you could super withhold so that all of your tax burden is covered by you withholding. Or – option three, a combination of both.
    Sorry, I’m making it more confusing for you aren’t I? Your situation is one where it makes sense to sit down with a professional, make a good estimate of what you think your tax debt will be, and figure out what the right withholding/estimated tax payment scenario works best for you.
    But the bottom line – you will be withholding for yourself – and paying your business taxes. The issue is what’s the best way for you to do that.

  26. Hi I am 26, currently in grad school and am working part-time and will make less 6000 this year. Can I put exempt on my W-4 form for my employer? Thank You

  27. Can you claim 2 if your single with one job? I do have two kids but my ex wife will be claiming them next year. Im trying to keep as much as possible in my check during the year.

  28. Hi I filed for chapter 13 bankruptcy in June 2017. I was told from my lawyer that I will have to give over my tax refund. Will I be able to exempt my federal refund from coming out of my check so that they won’t have anything to take? or can I claim three allowances on my check even tho I have only1 child and is single so that they will not take much from me when I do file and hopefully I won’t get much back?

  29. I am currently returning to a new job after having a baby. I am 23 and live with my boyfriend and attend college full time online. I’m not sure on how many allowances to claim.

  30. Hi There! I have a question. I am filing a W-4 for myself to be an employee of my own company. I recently switched my LLC to function as an S-Corp, so I need to put myself on payroll.

    In filling out the form, for the deductions portion – we always filed Schedule C in the past because we filed everything together (my husband and I) so I always have a ton of deductions for my business.

    Now that I will be filing differently, do I adjust my deductions for just my self only and NOT my business?

    Thanks!

  31. Hi Kaycee,
    That sounds good to me. You might even be able to get away with 5 exemptions. That’s because you get extra exemptions for claiming the child tax credit and the head of household filing status. That said, 3 should leave you with a refund. If your refund seems too large, then next year increase your exemptions.

  32. Hi Barbara,
    For less than $6,000 a year, she could claim exempt. BUT – I personally would recommend single zero. Why? Because too many times I’ve had kids wind up having to pay because they made more than they thought there were going to. And, most importantly for you, I find that the parents wind up paying the extra tax the kids owe. So Barbara, do yourself a favor and have her withhold at the Single with zero exemptions rate. Then, when she gets a refund, she’ll be really happy to have a little extra money just before spring break.

  33. Hi Betty,
    You’ve got two forms of income so it’s harder to figure what you’ll need to withhold. The first question would be – how much are you getting out of your 401(k)? The second question would be how much are you getting in social security? Plus, you’ve got wage income for the first half of the year also.

    You can go to the IRS withholding calculator, and get a pretty good answer. But you might not know what to input into the calculator since you’ve got so many changes. I would guess that you should claim 1. That’s really a guess. But if you’re completely lost, it’s a pretty safe one. If you wind up owing come April, change your withholding to zero. If things are looking okay, leave it at one for awhile.

  34. Hi Ann,
    So my question to you is – how are things looking so far? If your withholding is working out just fine – then don’t change it. Or, add one more dependent your husband’s w4. The reason I say to add the dependent to his W4 is that you’ll want the higher withholding on your paycheck – even if you wind up claiming your child because of your self-employment income.

    Now, about that student loan debt. I’m thinking you need to file separately to keep your monthly payment down, right? Usually, once you have children, your taxes are better filing together – but not always. But, to save $9,500 a year it’s worth filing separately.

    Good luck and congratulations on the pregnancy!

  35. How many Allowances should I be claiming?
    I am single not married have one fulltime job & one dependent.

    My paystubs currently show 3 dependents and I am not sure why or if that is even right?

  36. Hi, my daughter is 21, a full-time college student and I claim her as a dependent on our tax return. She is starting a part-time job, has no unearned income, and will be making less than 6,000 this year. Is she exempt or Single-0 allowances? Thank you.

  37. I just retired a month ago and am trying to fill out my W4 for withdrawl for pension payments. Gross pension payment per month is $619. I am single with no dependents. Should I claim 1 or 0 on my W-4?
    I also will be receiving a payment from my 401k and will need to pay taxes on that income. What is the best way to do this? Can I have tax taken out beforehand? If so, how?

  38. Hi I have a slightly confusing situation. My husband and I file married filing separately due to an overwhelming amount of student loan debt that I have (have to file separately to stay on my IBR plan or pay $9500 a year which we can’t really do). We both work and our salaries are similar. Right now I claim 1 and he claims 0. I am due with our first child in November. I also own a small direct sales business where I’ll have about 7,000 in income. So my question is should I be claiming something else? One of us will have to claim the child on 2017 taxes and I’m thinking with my business income since mine will be higher it should be me, but I’m unsure. Should one of us change our withholdings? Also should one of us mark Married, but withhold at higher Single rate on our W4?

    Sorry if that is confusing. Thank you!

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