Claiming Exemptions—the W-4 for Dummies

Posted on: 02/1/13 1,025 Comments

w4 for dummies

NOTE FOR 2018:   The Tax Cuts and Jobs Act that was recently passed by Congress is going to change the IRS withholding tables and how we fill out W4s.  Right now, we are still waiting for the IRS to supply the new withholding tables and create the new W4s.  This post is about the old W4.  I will be updating this as soon as I have new information.  But right now, the information below is for 2017 and earlier.  I do not expect the new information to be available until mid February.

-Jan

 

 

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

1,025 thoughts on “Claiming Exemptions—the W-4 for Dummies”

  1. I am starting new job in a few months and will make about 7,000 more per year than my husband. We have two kids and also itemize home interest, etc. Husband is currently claiming 3 and I claim 1. He has 401k and cafeteria pla. How should we dplit up the exemptions?

  2. So I did my taxes this year and owed $20 to the IRS… first time I have ever paid.
    We did not have enough to itemize.
    What did I do wrong?
    I claim 3 exemptions, My wife does not work and I have 2 daughters both under 15.
    Should I not claim 3 and go with a lower number?

  3. Hi Jan,

    I am single with 4 children and one job. I make 37230 a year. The past 3 years I claimed 11 on my W4 and paid no federal tax and this past year I ended up with a huge refund due to EIC and Child Tax Credit. I just started a new job, same salary just new company. What should I claim on my W4 as far as depends go? My gut tells me 5, but when I use the IRS calculator it tells me I should look into filing exempt on my W4. this scares me because I’ve always been told not to file exempt! Any help is appreciated!

  4. I’m trying to figure out what allowances I should take on my W-4 for a seasonal job. I am awaiting a federal disability hearing, and I know that this year I will only be doing this seasonal piece-work (11 weeks maximum) amounting to less than $3,000 gross income total. I receive public assistance but even adding that total in, I’m still below the federal guideline for minimum income one has to make before being required to file taxes (which is just over $10,000 for a single person with no dependents as I undrstand it). Based on the fact that I am single with no dependents and will have a gross income far less than the federal minimum required to file taxes, how many allowances could I reasonably withhold if I’m correct that my very low income will mean I owe no taxes?

  5. Hi Jan! My wife and I were married January 2016 and filed separately for 2016 due to my student loans and income difference. I was making $47,000/year and she was at $95,000/year. I just started a new job (March 13) making $97,000/year and she’s still at $95,000. She also receives tax-free VA disability benefits at $17,000/year. We plan to file jointly, but we have NO idea how to fill out my new W-4 and how to adjust hers. We also own a condo (used as rental property) with $1500/month income (we lose about $100/month on this with the mortgage + property manager + condo fees). We rent our primary home. Any suggestions? We want to make sure we don’t have a huge liability at tax time.

    Thank you!

  6. We’re both married! Both have full time jobs! I claim 0 my husband claims 3 My son works full time, and is in college full time! Daughter works full time! So we don’t claim them anymore! What should my husband claim on his w4 because we owe money every year!! We argue about this, I think he claims to high that’s why we owe every year!!! Please give me feedback

  7. Correction to my earlier question about the school teacher; she makes $39,000 and some change, BEFORE the $5000 this job will pay. Thanks again!

  8. Hi! My friend is a school teacher, filing single. She got a summer job and of course, is a “1”. The last time I filled out a W4, there were boxes to check about additional percentages being taken out. I always chose the middle or highest percentage. Now the form is different; askin for an answer to be written in. I told her to put 10% or 15% because the extra job pays $5000 and might put her in a higher tax bracket. How does that blank line work? Is she supposed to write in a percentage? She thinks it is supposed to be a dollar amount and I just don’t know because the form is different than when I was working. If it’s an overpayment, she will get the money back, right? She is afraid she will not and I am afraid she will owe if she doesn’t put something in. What is your opinion? She makes less than 36,000 before the summer job. Thanks in advance, Jennifer

  9. My husband is working two jobs , I don’t work ,we don’t want to owe at the end of the year but we really need the money on our checks we don’t want a lot of money taken out we are barley making it does he claim married 2 at both jobs or married 1 at both jobs we aren’t sure what we are supposed to do, he gets 35 hours a week 7.50 and hour and gets paid every week the other job he gets paid 8.00 30-40 hours and gets paid every 5th and 20th

  10. Hi Jan,
    I just want to understand why I claim only one if I’m a full time student and working about 30 hours a week. Why is it necessary to have so much money taken out of my paycheck? Why can’t I just go exempt or pay much less?

  11. Hi Sher,
    Well, the IRS withholding calculator is pretty accurate, but they strive for a zero dollar refund. I’m more cautious. I’d go for 8 exemptions and have a little fudge factor. But that’s my opinion.

  12. I have used the IRS withholding calculator and the personal worksheet. For the Personal Allowances Worksheet, it says 8 as my exemption. But with the IRS calculator, it says 12 as my exemption. Which do I follow? We are married with 2 children (under 17) and only 1 working full time.

  13. Hi Stephanie,
    Seven sounds right for you one the W4 – how about claiming 4? That gives you a bit of a refund, and money in your paycheck. Sort of splitting the difference between claiming 7 and claiming 2.

  14. Hi Sarah,
    Okay so you already know I’m going to say that you should claim single with zero allowances. You read the post, you know that’s what I’ll say. Your question is why? And you want me to explain it in plain English – I’ll try.

    In the US, we have what’s called a “progressive” tax system. Low income isn’t taxed at all. Then it’s taxed at 10%, then at 15%, then at 25%, etc.

    If you’re in the 25% tax bracket, the IRS doesn’t tax all of your income at 25% – just the part that’s in the 25% bracket. The income you earn that’s in the lower brackets is still taxed at the lower rate.

    Are you still with me so far?

    Okay, so now when you’ve got a married couple, you have two people getting income. But you’ve already used up all of the lower tax bracket money with the first paycheck. So the person with the second paycheck money is all getting taxed at the higher tax rate.

    That’s why I say that the person with the lower income should be claiming zero exemptions at the higher single tax bracket – because that’s going to be the higher withholding rate.

    I hope that makes sense.

  15. Hi Matthew,
    To get the closest to a zero dollar return, go to the IRS withholding calculator with your last tax return and your most recent pay stubs. Fill in the questions and you’ll have the perfect solution.

  16. Hi Jay,
    There is no law that says you can’t adjust your W4 to reduce your withholding. Do double check to make sure about the electric car credit. I’ve had three people come into my office this year thinking they were qualifying for certain tax credits that they didn’t qualify for. Please dot your i’s and cross your t’s on that one.

  18. Hello. Need help understanding what to correctly put on our W4s. My husband and I both work and we have three kids. My husband works full time and makes more money and contributes to retirement. I work part time and make less money. Currently we both have 5 allowances in our W4s. Is that correct?
    In your response, can you please explain your answer? I just don’t understand. I saw up above that the spouse making more money while working should claim all the allowances… I just want to understand why and what all that means. Thanks!

  19. Hi, Jan.

    My wife and I are both federal government employees. She makes approximately $120,000 per year, and I make approximately $95,000 per year. We have one child now and are expecting our second next month.

    In an effort to get as close to owing/receiving $0 at the end of 2017 (we file MFJ), how many allowances and exemptions do you suggest each of us claim?

    Thank you in advance.

  20. Hi Jan –

    I am looking to purchase a Toyota prius prime in 2017. There is a $4502 tax credit available for that particular vehicle.

    The only tax liability I have is from wage income (two jobs). Line 47 on my 2016 tax return was 6553.

    Can I legally reduce my payroll reduction, by claiming 5 or 6 exemptions on W-4, to offset my tax liability?

    It appears these electric car credits are designed for wealthier taxpayers.

    Thank you for your time.

    Jay

  21. Hi Jan,

    I filled out the form and tell me I can get put 8 allowances. Do you think i might owe and If I do will it be a lot.
    Im married with two very young children, house and wife is a stay at home mother.

  22. I am a single mother of one child. No one can claim me as a dependent. I have one job and file as head of household on my income taxes. I calculated 7 allowances on my w4. Could I use 1 or 2 instead of 7? I need more take home pay but I don’t want to owe taxes at the end of the year either. Also, should I claim claim head of household on my w4 or leave as single? Please help me with this.

  24. I am head of household. One child. One job about to start . I filled out the w4 with 5 exemptions…I can’t recall each one but it came to 5. Does that sound right?

  27. Hi Maria,
    You could owe for many reasons. Now remember, I haven’t seen your paperwork, so I’m just guessing at possibilities.

    It could be that you raised your exemptions for one month. It could be that you had some other income that was taxable. It could be that the withholding was wrong in the first place. It could be that you didn’t change your withholding until later in the year.

    The truth is, I don’t really know. I’m guessing that you probably should change your withholding to zero exemptions for 2017.

  28. My husband and I file married joint returns. We both claim 0 for nc state tax. We have had to PAY for the past 4 years?

  29. Hey! So the IRS withholding chart says 8 exemptions for my husband and I (we both work but I make more) and the IRS calculator says to put 4 exemptions on each w4. Should I put all 8 on the higher paying job and zero on his?

    Just clarifying.

  30. Hi Jan,
    I have a question I claim single 1 during the year and I still at the end of the year have to pay tax back. Can you tell me why would I owe taxes if I am claiming single 1 during the year. Also, during they year I did change my exemption to a higher one for one month would that be the reason why I now owe taxes.

    Thanks
    Maria

  32. Hi Alexis,
    You will be claiming your child on your tax return for 2017. So even though your child isn’t born yet, you can adjust your withholding for him or her now. Plus, there’s the $1,000 child tax credit as well. So, if you really wanted to put it all into your paycheck and not the refund, he could probably get away with claiming 14 exemptions! But I always worry about that because that’s cutting it a bit close. Especially if there’s any other income or anything on your tax return. Or – if one or more of your kids is over 17.
    But let’s say he claims 6 exemptions, that should really help your take home pay and still give you a nice refund. But you definitely have room to claim more exemptions if there’s no other income you need to worry about.

  33. Hi Humberto,
    Standard accounting answer: It depends. What type of Visa do you have? If you’re on an H1 Visa, then you’ll be taxed as a US resident, and I would claim 3 exemptions. If you are not going to be taxed as a resident, you may want to claim 0 exemptions just to be safe.

  34. Hi Stephanie,
    If you claim zero exemptions you’ll get less in your paycheck and a bigger refund. But if you claim 2 exemptions, then you get more in your paycheck but get a smaller refund. I hope that helps.

  35. Hi Stephanie,
    You can claim zero exemptions on your W4 even though you have a child, it would give you a bigger refund. But I think you’re fine claiming 2.

  36. Hi Camille,
    I don’t know. You could ask your HR department to see if they really did withhold your state at single with zero exemptions. Sometimes – and I can’t say this is the case because I’m not looking at your stuff, but sometimes people think they claimed zero exemptions and they’ve claimed withhold zero. That would cause you to owe a lot. If you only owe a little, that’s probably not it. Sorry, I just don’t have enough information.

  37. Hi Jan,

    I am not sure if I worded what really wanted to say correctly in my first email. I am a single parent, I claim head of household and I have one son. He may incur some expenses during spring break, summer camp and winter break. Otherwise than that, he does not attend aftercare. I recently took on a new job paying about 60k a year. For some reason, I would like to get more back at the end of the year. I have been claiming 1 since he has been born. Can I claim zero???? Or should I be claiming 2????

    That is my question.

    Thanks,

  38. Can you claim zero and be single with one child and head of household. If not, if I claimed 2 will that possibly make me have to payback at the end of the year making 60k a year.

  39. Hi Bmac,
    You put me in an awkward situation. You don’t want to have more money taken out of your paycheck, but you don’t want to owe the $3,000. So I’m thinking it’s going to be one or the other. Unless you mean changing your husband’s withholding. He could withhold as single with zero. It will increase your withholding but it comes out of his money, not yours. And let me just slip away while your two fight over who’s check the extra money is going to come out of.

  40. Hi Ethan,
    The only purpose of the W4 is to tell your employer how much money should be withheld from your paycheck towards your income taxes. The IRS never gets your W4, it’s just an information document between you and your employer. You won’t get in trouble.

  42. Hi Kayla,
    It depends. If your tax return is pretty balanced, then I’d keep things just the way you’ve got them. I would more likely have you claim single with 0 exemptions on your W4 also. But like I said, if what you’re doing works – why change it?

  43. Hi Paul,
    If you got $10,000 back, you probably were withholding too much. 8 seems like a lot of exemptions, but you did have a large refund. But just to be safe, go to the IRS withholding calculator. Take your most recent pay stub and use those figures and your tax information and run it through there. I’m guessing it will also tell you that you should have 8 exemptions, but if it tells you a smaller number, I’d go with the smaller number of exemptions.

  44. Hi Jen,
    This question seems like it belongs in the split exemption blog, not on the W4 blog. That said, you and your ex should work out your taxes all the way around. You claim 2 she claims o. You each claim 1. She claims 2, you claim 0. What works the best for you all combined? If you both work together, this could be good. But if you don’t trust each other, you might not want to go that route. You should read this post: Exes that Get Along

  45. Hi Danielle,
    If you and your husband file separately, you handle your W4 like you are single. And you lose some of your deductions also. You can’t change your withholding for 2016 – it’s already over. You can only move forward, so adjust your W4 no for 2017.

  47. Hi Jan,
    My husband works one full time job and one part time job. I also work full time. We have two children.
    Should he claim married – 4 on his full time job, single – 0 on his secondary job and I claim married hold at single – 1?

    Thank you for your help!

  48. Hello Jan,

    I am a contract worker. Last year I claimed 1 exemption. With all my deductions ($17K in health insurance premiums alone, property owner, expenses from a sole proprietorship, etc), I am getting around $10K back this year. While I like the check, I would much rather have that through the year. I ran my information through the Deductions and Adjustments worksheet on the back of the W-4 and came up with 8 exemptions. That seems like a lot to me, but this is also the biggest return I’ve ever gotten.

  49. Hello Jan,

    Can you help me. I posted a comment before this but it seemed like you did not get it. “Awaiting moderation” im not sure what that means.

    My ex-wife is trying to convince me that we should clain 1 child each so we get big refund. I am supposed to claim both but she suggest that she should claim 1 so i get a big refund. She said she will transfer the refund to me after? Is it true? Or will it just be the same?

  50. Hi Ashley,
    It sounds like you may have qualified for an Earned Income Tax Credit. Now, it may be that your income was lower because of your temp job. So you’ll want to think about what your income is really going to be. I’m thinking you could do 6. Another 1 for claiming head of household, and another 1 for claiming the child tax credit too.

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