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
Hi Jerry #39,
Who’s Debra?
anyway, since you have no health insurance, you’re going to get hit with the health insurance penalty which will pretty much eat up that refund you’re used to getting. At $57K, for 2016, your penalty will be $1425. So, you might want to go to http://www.healthcare.org and see what the insurance would cost you. Without healthcare, I’d claim zero exemptions in order to pay the penalty. If you’re buying health insurance, I’d claim one exemption so you’ve got more money to pay for the health insurance. Either way, you won’t have the $1700 refund you’re used to.
Hi Julie,
Yes, you can claim your son as a dependent on your tax return. And he should be claiming single with zero exemptions on his W4 for 2016.
Single
In College
20 yrs. old
Working part time
Live at home with Parents
How should I file ?
My Wife and I both work full time jobs and have additional amounts taken out of our checks each pay period. What is the maximum amount additional you can have taken out without being penalized for it
Hi.. I’ve been working part time since May.. Year to end gross is 6310. I filed 6 on w4. Unfortunately i just now realized no federal taxes to date have been taken. I filed single head of household with 1 daughter. No child support no alimony One job. I’m freaking out because i was banking on a federal return to get us out of a domestic violence shelter. I think i may owe now. What should i have claimed?? Please help. Thank you
Hi.
I was wondering, I have 2 jobs and my main job I claim 4 and the other job I claim 1. Is it ok or will I be in trouble when its time to file my tax and will I owe back or have a smaller tax return? Also single mom with 3 kids.
I have a question. I work for an employer who hired a company to process our payroll. My employer also stated that our w2 will now say that we are employed by this said company instead of who we actually work for, so that my actual employer can get a tax exemption and or deduction, for “not having any employees”. What is this? And is it legal?
I am currently married (no kids), employed, and also drawing retirement pay from the military (retired after 20+ years of service). My wife does not currently work. I just modified my W4 from (4) withholdings to (2) because my employment check was being heavily taxed and when I re-read the W-4 form, I realized I had errantly requested (4) exemptions instead of the (2) that I can justify… I’m trying to sort out the ramifications of going from (4) withholdings to (2)… your thoughts? -Dan
my question is what should i claim if working alot of overtime hours?single with no children.
Hi Jan, I was wondering I have filed 10 dependents for about 5 months, I am a single parent with one child. Once I saw that I had not changed the 10 dependents, I immediately changed my information. I am currently filling 3 exeptions and Exempt for the last 3 moths. Do you think I will be fine? Thanks in advance.
Sorry I meant to say ‘Jan’ not ‘Debra!’
Hi Debra,
I live in California and I just recently lost my job in November but luckily I have a new job. The down side is I make 8k less (was making 65k, now making 57k per yr) than my previous job and the new job does not offer health benefits because it’s small company of 5 employees. At my previous job I have zero allowances/max taxes taken from each paycheck and would usually get around $1900 refund from federal and around $200 from state at tax time. I’m single, live in an apartment, have one child but his mother claims him because she has more visitation time. Should I keep it at zero allowances or maybe change it to 1 or 2? I like to have a tax refund each year as I usually use it for vacation but the whole not having health insurance kind of scares me as I’m 38. What say you? Can I change it to one and still get a decent tax return?
Thanks!
I just found out that my son who is in college was claiming exempt on his W4 this past year. Can I still claim him as a dependent on my tax return?
He did get informed by his employer that unless he filed another W4 his status would be single with zero allowances for 2016.
Hi Allison,
You’ll know once you file. You can plug the numbers into the software and take a look. My rough estimate is that you withheld about $1000 less than last year, so what was your refund last year? That will give you a clue.
Hi John,
you work two part time jobs and live with your parents. At the very least, I’d claim single with zero exemptions. If your parents claim you as an exemption, then that’s what you should claim. Now if you’re a student, and you don’t make too much money, you’re probably okay with that. But if you’re making a living off of those two jobs, you might actually have to have extra withheld from your income.
Why? That must sound crazy, single zero is the highest withholding rate, right? But look at it this way: let’s say at one job you make $$6,000 a year. Well, that would still be zero dollars taken out for taxes right? But if you had one job that you made $12,000 a year, well then they’d take out. about $600 for taxes. And you’d zero out on your tax return. But–if you had two jobs at $6,0000 each? No taxes would be taken out, but you’d still have a $600 tax liability on your tax return so you’d owe.
The IRS withholding calculator will tell you how much extra to withhold if you need to do that.
Hi Daren,
the IRS withholding calculator computes your refund to zero so that’s perfect for you. The quick and dirty rule (which is a shoot from the hip kind of rule) is for every $1,000 that’s one exemption. But that’s really a rough estimate. We’re so close to tax time, you can do some serious planning with your preparer, or on your own when you file your 2015 tax return. If you’re really trying to get to a zero refund, the IRS calculator is the perfect tool for you.
Hi Sharon,
I’m leaning towards 4, you’ll take home more pay and still shouldn’t owe.
Hi Jacob,
I’d say Single with one exemption.
Hi Leslie,
I can’t predict your income so I’m sticking with married my usual: withhold at the higher single rate with zero exemptions. That’s the safe route. Or use the IRS withholding calculator using your tax return and paystubs.
Hi,
I just want to brace myself for tax season. My husband makes about $10,000 a year, I make closer to $35,000. Last year he had claimed 2 exemptions, which withheld almost nothing from his pay. I had overpaid such that it evened out.
This year, I claimed 1 (I have always claimed 0 in the past) thinking that it would be more accurate & I asked him to reduce his exemptions so that we won’t owe. He struggled for months to get his employer to change it, but I just realized that he reduced it to M1 and his pay stubs show very little withheld. Should I expect us to owe a lot because of this?
If I work 2 part time jobs and live with my parents, how many allowances can I claim? Does it matter if my parents claim me as a dependent even if I work 2 part time jobs? Hope to hear from you soon.
Hi I have a question. My wife makes 65000 and I make 85000 we have no kids to claim as they are adults what would we claim on w4 to ensure we break even? Right now we claim married 1 but at higher single rate and get a refund, but we are not concerned with refund just want to break even as refund is not paid interest and we want to maximize our paychecks. Thanks for advice.
Single mom, no child support, $26,000 year income – I’m thinking I’m a 3 or 4???
I am a single guy not married – no kids. What should I claim on my w-4 for state and federal?
Thanks.
Hello
I am wondering if I am taking a temporary job just for 2 months, am married with 4 children and my hubby works fulltime. What do I do to get the most out of paycheck but not have to owe in the end?
Hi Bob,
You’re going to owe, at least I’m pretty sure you’ll owe based on what you told me. So the issue is, how do you pay? If you can, I’d make an estimated tax payment now. Figure what you’re going to owe and start paying the IRS what you can before you actually file. https://www.irs.gov/Payments
If you can’t pay the full amount by the time you file, you can always make a payment arrangement with them. But, you’re better off paying in full if that’s at all possible.
Remember, don’t file late! If you file late, the penalty is 5% of the tax you owe per month (up to 25%.) If you file an extension, that only gives you an extension of time to file, not to pay. If you pay late, the penalty is 1/2 of 1 percent per month. So even with an extension, you still owe the late payment penalty.
And remember the IRS charges interest. And even though the interest rate is only 3%, they compound daily!
Good luck.
Hi Jackie,
You have 3 dependents and you make $25K a year and you claimed exempt. Will you owe money? It depends. Are you a single parent? Then I don’t expect you to owe anything. Are you married with a spouse that has an income? That could make a huge difference.
But here’s the thing, I really don’t like seeing “exempt” on the W4–even if you don’t owe tax at all. I’d much rather you do what Chandra did, She claimed 7 exemptions and she gets all of her paycheck (less the social security and medicare of course.)
I like claiming the 7 exemptions because lets say that you (or she) get a big fat raise. A big raise that could kick you out of EIC and put you into owing income tax. By claiming exempt on your tax return – well there would be no withholding and it’s not HRs fault if you don’t go and change your W4 after your raise. But if you’ve got the 7 exemptions and you get a big raise, well the payroll people will start withholding what they need to. And you won’t have a big problem come tax time.
Now you might be thinking – “Yeah, and what are the odds that my boss is going to give me a honking big raise this year?” That’s a legitimate question. But I did see that happen to a young woman before and we had tears in my office when she saw the tax bill. (I always keep a box of tissues on my desk.) So, that’s why I’d rather see you claim 7 exemptions than “exempt.” (Because you want that honking big raise–you do. You just want to be prepared for the taxes.)
Hi Chandra,
It’s quite likely that 7 is the right number. One for you, 3 for the kids, one for head of household, and I’m guessing that 2 of your kids are under age 17 so that would give you 7 exemptions. A single mom with 3 kids: you need all of your paycheck!
My gut reaction is that everything is just fine. You’ll be filing your taxes soon anyway. If you wind up owing, then you’ll want to claim fewer exemptions for 2016, but I’m thinking you’ll be just fine.
Hi Ashely,
I have two Ashley questions in a row and you have different email addresses so I’m assuming that you’re two completely different people.
Ashley number 2, you also really should go to the IRS calculator. You know your annual numbers and I bet you know your withholding, etc. This page is for general information. If I run numbers for you, we’ll need to have a confidential discussion and I charge $200 per hour. (I expect this would take 1/2 hour of time.)
Sorry, but these comment sections are just for general type questions.
Hi Ashley,
You’re probably fine for December. What I would do though is take your most recent pay stub, and use the IRS withholding calculator to figure what your withholding really should be though. As a mother of one, you easily will have 2 exemptions. Probably 3. But with EIC, it could be even more. It all depends upon your income.
People have a hard time figuring their annual income, which is a question the IRS calculator asks. It’s really not that hard. Let’s say you make $400 gross (that means before they take out taxes) on every paycheck. Then you need to know how often you get paid. Is it $400 every week? (Mulitiply by 52 weeks.) $400 every two weeks? (Multiply by 26 weeks.) $400 two times a month? (Multiply by 24 – 2 paychecks per month for 12 months.) Or $400 a month? (Multiply by 12 – and ask for a raise, that’s a really small salary!)
The higher your income, the more you’ll need to make sure that you are withholding. But when your income is really low, you may still be exempt. If you have your taxes professionally done, your tax pro can run these figures for you.
Hi Tiffany,
By penalty, that would be a penalty for not withholding enough tax. It kicks in when you owe over a $1000 on your tax return. It’s really not that high, and it’s just a small percentage of the tax owed. And, many times, you can get that penalty waived – like if you didn’t have to pay tax the year before.
My point is don’t sweat this. The worst thing that can happen here is that you owe the IRS money. It’s not like you broke a law or anything like that.
i made close to 76k, i went excempt for about 9 months the only money they ever took taxes were 22145.82 which was 2031.17. am i going to get introuble?
Hi, i have no knowledge to when it comes to taxes. A couple coworkers told me they claim exempt because they have either 2 or 3 dependents earning around 25K a year. They said they don’t end up owing anything when it comes to tax season. So I went ahead and put exempt because I have 3 dependents and I had no idea what I was filling out. Do you think I will be owing anything at the time of tax season? I make 25K a year with 3 dependents.
I am a single mom and I followed the worksheet and my number ended up being 7 so I marked 7 and I get all of my paycheck..i have claimed this all year except one month when I was out of a job..my first Jo I was part time but now I’m full time so I’m curious if that is a bad thing or not. I have 3 children and in school part time.
Hi,
I need some advice on what to claim going into 2016 with a new job. Here’s our situation:
1. Husband makes $58k, excluding bonuses which are typically about $5k per year and has a 401k. He claims Married withholding at higher single rate and 0 allowances
2. I will be making $26,500 with no bonuses or additional income. I have a state funded pension that I pay into.
3. No children
4. We own our house
Would I be able to claim Married and 1 Allowance and still receive a tax refund? I’d like to get a little more out of my paychecks since I typically claim Married but withhold at higher single rate and 0 allowances. We have ended up with a refund of at least $3k every year. I understand that it’s just the government holding onto our money but it does help us save.
Any guidance is appreciated!
Hey Jan, I’m a mother of one. I just recently started working in December. I was wondering do put claim exempt on my w-4 form. I am filing next year but I didn’t want to mess myself up from filing. I haven’t made much money at this job so what you think would be best ?
I claimed exempt more than 6 months this year. I didn’t know there was a penalty until I read about it. What is the consequences of this?
Hi Ashley,
I’m more inclined to agree with you, but you’re so close to the end of the year, why not wait until you file your taxes? If you wind up not owing or getting a refund, okay – no problem. If you owe a lot of money, then adjust the W4. It’s quite possible that in your situation, 10 could be the right number of exemptions. (If you received EIC – then it’s quite possible you don’t need much withholding.)
Hi Brenda,
I probably won’t make a very big difference at all. But just don’t forget to change it back in January.
Hi Prad,
Read the actual blog post where is says married and you both work. That’s the simple answer. Or, go to the IRS website and use the W4 planner.
Hi there me and my husband are not on the same pag with taxes hope you can help. My husband works I stay at home we have 2 children what should we claim? I think 5 but my husband wants to claim 10 and I don’t think that is right. Are one son does to go privet school and we do pay more then 2000 in schooling for him.. Please help….
Hi, I have a question about exemptions. If my husband and I change our withholdings just for the month of December from 0 to 4 will that affect our tax refund much? We usually get a big refund at tax time due to claiming 0 all year long.
We are married with one kid. My wife got a new job in November and our son is going to full time pre-school since October. We are planning to file taxes as ‘married filing joint’
(1) Would both of us claim 3? or 4?
Or would the claims for me and wife should differ? If yes, how much should each of us claim?
(2) Would these claims remain the same for 2016 too (if no other changes happens with our jobs or filing status)
Note: I have a high paying job than my wife.
Thanks,
Prad.
Hi Marisela,
What you put on your W4 is only a way to say how much your employer should take out of your paycheck for taxes. You won’t be in trouble for claiming 3 on the W4 and only 2 on your tax return.
The worst that will happen is that you will owe taxes at tax time. But I’m guessing that you’ll be just fine. If you do wind up owing, then change your W4 for next year. (Go down to 2 exemptions instead of 3.)
If you get a big refund instead, you could even claim 4 exemptions on your W4 and get more money in your paycheck.
Hi Timothy,
Moving ahead for 2016 – I’d claim 4 exemptions. As far as 2015 goes, that sort of all depends upon how much your wife made etc.
You might even be able to claim more exemptions because you should qualify for child tax credits for the kids, but of you stick to 4, you’ve got some fudge factor built in and might get a little refund in 2017.
Hi Brian,
That’s a really good question. Technically, if you claim exempt, when you shouldn’t, you employer is supposed to ask you for another W4. If you don’t provide it, then your employer is supposed to withhold at the single zero rate unless there is an old W4 with a different withholding on there.
The key phrase here is “supposed to”. I don’t know anybody that that’s ever happened to. I had a client that I told to change her withholding to single with zero exemptions. She goofed up and claimed “exempt” Her income was over $50,000 a year – a classic case of when the employer should do that automatic change. Instead she had a huge tax bill because of not withholding anyting.
So, don’t expect to go to jail or anything like that. There is an “underwithholding” penalty on your tax return. But that penalty is pretty small so I wouldn’t worry about it too much.
I claim 3 in my w-2 or w-4 but I will file 2 in my taxes. Will I get in trouble. Me and my kids father are separated and I though I had changed my claims but it never went through becuase I forgot something to add or I did the paper wrong. He will claim one of our children and I claim the other one. What do I do in this case. I dont want to get in trouble? He claims 2 in his forms.
Hello. I hope this is an easy one. I am married, my wife only worked until October 23rd (just had our 2nd child) and won’t be returning to work.
So, married, with 2 kids and only I work full time and I am also in school full time.
Would I claim 3? Or 4?
Is claiming exempt unlawful (even if you pay in full by April 15?) Any penalties accrue?
Hi Kisha,
It’s absolutely fine that you only claimed 0 exemptions on your W4–it will help you get a bigger refund. Now, that’s fine, but if you want to have more money in you take home pay, then claim 2 exemptions. Your refund will be smaller, but you”ll have more money with each paycheck.
Oh course you still get to claim your child on your tax return, it’s your child.
Let me see if I can explain this in an understandable manner. It’s kind of complicated, even for me, and I do this stuff for a living. I hope this makes sense.
1. The IRS wants us to “pay as we go”. That’s why we are supposed to withhold income taxes from our paychecks.
2. Our income taxes are based on our personal situation: married or not, kids or not, other income, and all sorts of stuff. So Kisha, you and I could make exactly the same wage but have to pay different taxes because you’re single with a child and I’m married and my children are all grown up and out of the house.
Are you with me so far? Okay.
3. We have to make our best guess about how much to withhold. We do that with the W4 form that we give to our employers.
And this is the whole weird thing. We’re GUESSING! Now granted, we guessing the best that we can, but unless you’re actually running the numbers and you have all the information you need, it’s still a guess. But we try to make the best guess that we can.
So we’re never going to be exactly at zero. And lots of people don’t want to be at zero anyway. Some folks want a big refund, others like to end the year owing. We all have different opinions on that.
4. The IRS doesn’t get the W4, that’s only for our employer to let them know how much we want to withhold. So I could claim 7 exemptions on my W4, even though I have no children to claim on my tax return. Now I would wind up owing tax because I didn’t withhold enough, but as long as I pay the tax by April 15th, I’m okay. Just like you’re claiming zero exemptions. You’ll have a bigger refund because you’ll be claiming your child on your tax return, that’s fine too.
The bottom line is: the W4 is really just for our employer to know how much money to take out of our checks to pay our income tax.
If I could, I would much rather say, take “$X out of each check for my tax. For me, it’s much easier for me to compute it that way. (But then, I’m a math geek.) The IRS thinks the W4 is easier for most people. But as you can see by the number of people who ask questions here, the W4 is not easier.
I hope this helps explain it a little bit.