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. How about if you live with the father of your children but are not married. And have 4 kids together. He works full time and I worked full time last year. Then got a second job and went part time on both towards the end of the year. Then by December I was just working the at one part time job. And what should my allowances be? We usually split the kids. And do our taxes seperately

  2. Good morning, Jan.
    Hope the new year is treating you well.

    I am single, childless, a college graduate (but am currently paying off said loan) and have 1 job. I normally claim 3 exemptions, because that’s what I come up with by following the instructions and putting a “1” on lines A, B, and E. Normally I have owed money, about $200-300 each tax season since graduation but I think this was because of having no health insurance. However, my new job (started in May 2016) gives us insurance.

    Do you still think that as a single person I should be claiming only 1 allowance? I used the IRS calculator, and it seems that doing so would hurt me during the year…or at least make it difficult to pay my monthly bills without some penny-pinching.

    I make $33k per year salary, and have a .006 commission on sales that gets added to my paychecks every 2 months…usually bringing my biweekly paycheck from $1080 to $1500. It seems like the commission pay gets taxed on a different rate?

  4. Hi Terri,
    Alimony is taxable. Child support isn’t. That’s going to make a huge difference in my answer. If the $1,000 a month is truly alimony, then I would definitely not claim 11 exemptions. I’d probably claim zero. But, if the $1,000 a month is really child support – which doesn’t get taxed, then 11 exemptions would probably would be okay.

  5. Hi Jan,
    I am married and my spouse does NOT work. I have three kids that I have always claimed on my tax return. I just got a new job… what do I claim on my w-4? I don’t want to owe anything at the end of the year by don’t nessasarliy count on a huge refund. Thanks in advance:)

  6. Good morning Jan,
    I’m newly divorced as of December 2016. I currently claim 1 exemption on my W4. Now that I’m single and my 3 children live with me 95% of the time, should I file a new W4 with my employer? The IRS W4 worksheet says I should claim 11? I’m thinking that is too many exceptions and I don’t want to owe at the end of 2017? My earned income is less than $30,000 but I do receive $1,000 a month in alimony and I also receive child support? My kids are not in daycare. So confused?

  8. Hi Sadie,
    I would run the numbers both ways and see what gets you the most money together as a family. Use the extra money toward’s your child’s college fund.

  9. Hi Paul,
    Congratulations! I think you can go ahead and increase to 3 right now. Even if you baby isn’t born until December 31st, you still get to claim him or her for the full year. Plus, you should qualify for the child tax credit – which would give you another exemption – that should balance a little against your wife’s income through March.

  10. Hi Lauren,
    In your situation, I would withhold at the higher single tax rate with zero exemptions. If you want to take out even more than that, you can choose to withhold extra – that’s that additional amount withheld on line 6. How much extra to withhold depends upon how much tax you usually owe and how often you get paid.

  11. I was in prison for the past 8 years and had no tax liability because I had no job. I started a job September 19th 2016 and claimed exempt on my w-4. How long can I legally claim exempt

  12. Hi, my boyfriend and I are not married and we have a child and live together. He makes more money than I do, and I am wondering, should he claim our daughter on his taxes, or should I?

  13. Hi Sepe,
    You will take home more money in your paycheck by claiming your daughter on your W4.

    I realize you didn’t ask me this, but I’m going to give you some extra tax advice here. Your daughter may help you qualify for extra tax income – and with your husband in jail you could probably use it. If you file as married filing separately – you can’t get EIC. Normally, you want to file MFS when a spouse is in prison, but that might not be best for you.

    Now, if he went to jail for doing something crooked with money – like tax fraud, or embezzling, something like that – you’d want to do the MFS and not have anything to do with his taxes, you wouldn’t want to be tied to him on anything relating to money.

    If he’s been out of the house for the last six months of the year (since July 1) then you may claim Head of Household filing status. That would be good, you could still claim EIC.

    If he just recently went to jail, then the only way to claim EIC would be to file jointly – you may want to get a professional to help you to make sure you’re doing whatever you need to do to get the best refund.

    Good luck!

  14. Hi Jan,
    I will be the sole income provider in March, when my wife stops working and we have our first child coming. I’m currently claiming 1 withholding on my W4, but would like more out of my paycheck starting now. Do I increase to 2 now, then add another once our child comes?

  15. I am beginning a part time job. My husbands works a higher paying job and we have one son. We usually owe money at tax time, so i would like to have more money taken out of each paycheck to limit the payment at tax time. What is the best way to file? Thank you.

  16. Hi jan roberg i have a question im married i have 8 month old daughter my husband his incarcerated in jail i barely just started working as a caregiver and im claiming my daughter on my paycheck so do i get more money cause i claim her or less?

  17. Hi Bryan,
    Getting married is so wonderful! But the taxes just stink. When you adjusted your withholdings, I’m guessing that you changed your status to Married instead of Single. So even though you claimed zero exemptions and he claimed one – by changing your status to married from single you greatly reduced your withholding!
    Married couples that earn a lot (I’m guessing that you both make good money) get nailed. That’s why the second spouse needs to withhold at the higher single rate. My gut says to have you claim married with 2 exemptions and your spouse claim single zero. But sometime around February, grab your paystubs and run them through the IRS withholding calculator just to see if you’re on target or not.

  18. Hi Jay,
    I come up with 8 using the W4 worksheet. (I assume you make less than $100,000). Personally, I like a little wiggle room. I’d go down to 7, just to be safe. But 8 should put your return at even – assuming you have no other income.

  19. Hi Steven,
    You’re a prime candidate for using the IRS withholding calculator. (I charge for that kind of analysis, but you’ll get the same answer using the IRS withholding calculator and it’s free!)

  20. Hi Katie,
    It basically depends upon how much you make. (The more you make, the more that refund was based on your withholding instead of EIC.) But I don’t expect you to owe.

  21. Dear Mrs Arnold,
    Congratulations on your marriage! If you plan on filing married filing separately, I’d claim zero for both just like you used to. Claiming zero probably gives you a bit of a refund, but unless money is really tight, you’re just fine. (It will give you a little “secret stash” money around tax time.)

  22. Hi Jan- hoping you can help me understand where I might have gone wrong. Got married in 2015; I make significantly more than my husband. When we adjusted our withholdings around our wedding in June 2015 I went to 0 and he went to 1. Thought process is that that would increase the total tax withholding between us. Our return for 2015 netted a small refund. As I estimate 2016 I’m seeing a significant ($4k) balance due. In reading the resources online I’m understanding that the trouble is that ultimately his income will be taxed at the higher rate, which my wages put us into, and of course his employer doesn’t know to withhold at that rate. Is that accurate?

    Furthermore I read that the advice for people in our situation is to have me, the higher earner, claim the withholding allowances for the family and have him claim 0 or even elect for the higher single rate. What I don’t understand is how that would help, especially the part about having me change my withholding from say 0 to 2.

    Thanks for the assistance.

  23. Hi Jan,

    I just started a new job this week. I’m married, my spouse doesn’t work and stays home with our two small children (3 and 1). According to my W4, I should claim nine allowances. This seems really high to me. Does this sound legit or am I missing something? Thanks

  24. My wife and I are both currently employed full time, have one daughter with a son on the way. We are looking at our current W-4’s, and need advice on what we should claim and who claims what. My income is around $65,000 a year, and my wife’s is around $45,000. We both contribute significantly to our retirement (16%), and I fully fund my personal HSA. We do not not have enough deductions, therefore have to claim the standard deductions every year. My wife’s employer has a dollar for dollar match on her DCAP up to a combined amount of $5,000, which we fully contribute to ($2500 pre-tax). With the addition of our son, we will be paying for his day care on our own ($6500 annually). We are trying to increase our take home pay, with getting as close to no return at all +/- $500. Can you lend any insight on to what I should claim on my W-4 and what my wife should claim on her’s? Thank you in advance.

  25. Hi Jan,
    I am single, head of household, and I have 2 kids, I claimed 3 allowances this year, in the past I had claimed 0 and got a big refund check, with me claiming 3 this year will I still get a nice refund or will it be different? Just worried because I’m really depending on this refund check. Thank you in advance.

  26. Hi there Ms Roberg,

    I’m a little confused… I’m recently married, no children and a full time job as well as husband. I make more than My Husband and I already know I’ll file separately. What I would like to know is, do I claim one (1) for both federal and state?
    Right now, under federal it says one and state says zero….
    Help!!! I’m truly new to this.
    ps… I’ve always claimed zero (0) when I was single for both federal and state…. Was that a good move?

    Thank you for all your help
    Mrs Arnold

  27. Hi Chris,
    I would claim zero on the second job. Without having all the information, that would make the most sense to me. One problem I have with the IRS withholding calculator is that if you don’t already have a pay stub in your hand you don’t have the numbers to plug in and that can be frustrating.

    Here’s the thing to know about the second job. Whatever you make in your main job- that’s basically your base pay. We basically apply all of your deductions and exemptions to that paycheck. So you’ve got a wife, 2 kids, yourself, your married, etc. So any deductions we think go against that paycheck. Am I making sense so far?

    Now that second job is income over and above your main job So–all of your deductions have already been used up because they want with the income on the first job. So, for the second job–technically, that money should be taxed at a higher rate (because you used all your deductions already.) That’s why I recommend claiming zero exemptions on the second job. Usually, for a second job, I recommend claiming married (but withhold at the higher single rate) with zero exemptions. Since you usually receive a large refund, you may be able to still claim married withhold the higher single withholding – but it could reduce your refund. It’s hard to say without the actual numbers.

    I’d start with married – zero exemptions. Keep it that way at least through January. Then run the numbers through the IRS withholding calculator again just to check. There’s a screen on the second page that asks how many jobs you have. It’s preset to 1 and kind of easy to skip over. Once you put in 2, then you’ll get two boxes for the two paychecks. That should help get you to where you want to be.

  28. Hi Jan,
    I am married with 2 kids. Ive worked 1 part time job all year, and now got hired for a second part time job starting 2017. Ive claimed 2 for my first job and have received a large refund every year, which we like. My spouse doesn’t work so i would be the only one claiming something. I didn’t even think about what to claim on this new job. Do the numbers you claim add up from each job? The IRS calculator says that i shouldn’t do anything different, but there is no option for the second job issue. Should I claim 2 as well on this new job? Since I’ve claimed 2 on my original job would that be viewed as 4 now or still just 2? Im just trying to keep our refund around the same and not claim too much, but at the same time, not having too much taken out month to month.
    Thanks!

  29. Hi Sacha,
    Since you already have another job, I’d claim single with zero exemptions on the weekend one. If this part-time job is going to last for a long time, you might want to take a look at your pay stubs next February and just run them through the IRS withholding calculator. Just to be safe.

  30. Hi Misty,
    your daughter might be able to get away with claiming “exempt” but just to be safe, it’s probably a good idea to claim single with zero exemptions. That way, if she winds up earning a lot of money over the summer she’ll be covered for her taxes. If you’re pretty sure that she’ll make less than $6,000 next year, then keep her at “exempt”.

  31. Hi Jan!
    I’m single, no kids, full time job and just started a part time job on weekends and was wondering if I should claim 0 or 1 on my w-4 form. I do not want to owe anything at the end of the year. what’s your best recommendation for filing?
    thank you!
    Sacha

  32. My daughter is 17 she just started a part-time job she’s in high school I think we can claim her this year on our taxes what does she file on her W4? Also she will be turning 18 at the end of January.

  33. Hi Lori,
    As a single person with a child under the age of 18 – normally I’d say you could probably claim at least 3 exemptions. But it get’s a little weird with 2 jobs. But, I’m still thinking, since you’ve claimed 0 exemptions for your full-time job, you would probably be okay claiming 3 on the part-time one.

  34. Hi Jermaine,
    At this point in your life, it’s unlikely that married filing separately would be a good choice for you. Usually, you’re better off filing together. But, things change. For example: one spouse has a lot of medical expenses that may be deductible if you file separately. In Missouri, sometimes it makes sense for older couples to file separately with certain types of pensions if the federal hit isn’t too bad. But there aren’t a lot of scenarios where filing separately helps your tax situation.
    As far as your withholding goes, it sounds like you’re doing just fine the way you are. If you prefer to get a federal refund, then one of you could reduce your allowances by 1. But if you’re happy with the way things are – like my dad always said, “If it ain’t broke, don’t fix it!”

  35. Hi Susan,
    A quick way to check is to go the the IRS withholding calculator. It’s almost like doing your tax return and it will give you a good clue as to whether you’ll get a refund or not. My guess is that you’re going to be just fine.

  36. Hi Mony,
    Bienvenido a Los Estados Unidos. Since you are married, I’m guessing that your husband is also working. I would fill out your W4 as married with zero exemptions. That’s a good starting point. After a few months, like maybe in March or April, you can take your husband’s pay stub and your pay stub and run them through the payroll calculator to make sure that you’re on track. It will be early enough in the year to make adjustments if you need to. But you’ll have enough payroll experience that the numbers should be pretty standard. Good luck at your new job.

  38. Hi Jan,
    I work f/t, I claimed 0 W-4. I just started a p/t job should I claim 0 on this W4 as well? I am single with 1 child under 18.
    Thank you.

  40. Hi Jan,

    My question “should” be rather simple but would like your guidance. I’m married with two kids (1 year old and a 3 year old) both of which are in daycare. My wife and I both work (I make about $137k and she makes about $60k), We have always filed as “Married Filing Jointly”. What should my allowances be (as the higher earner) and what should hers be as well? I’ve read things about the higher earner should take a majority of the allowances and I’ve read other things where she should just have 2 allowances (one for herself and one for one of our kids). Currently I have 1 Federal Allowance and 0 state and she had 1 Federal and 1 State. As I do our taxes in Turbo Tax, what typically happens is we’ll owe some to the Feds and we’ll get a refund on the state. The state refund is usually enough to cover the Fed, with a little bit left over.

    One other question I’ve just thought of, would there ever been a good “scenario” to file Married/Filing Separately for tax reasons (like if one spouse earns significantly more than the other)? I’ve worked out the paperwork through TurboTax before, but its never been in our favor.

    Thanks,
    Jermaine

  41. Hello, I think that I just realized that I claimed 3 on my W4. I’m afraid that I will owe money. I am depending on my refund. I’m single, a mother of one. I always got a decent refund back before but I think that was because I claimed lower than 3. I can’t believe I made that mistake.

  42. hi,im starting to work , in my first job in usa, im from argentina, married in usa, im stressed!!! how i must fill the form w4?? i never worked here before. I have a daugther , and i dont know how to fill the page 2. help!!

  44. My W4 personal allowances worksheet states that I should claim 3 allowances – I am married, I have only one job, but my spouse is currently not working. I was previously claiming 0 allowances but, as we’ve just purchased a home, I would like to reduce my tax refund and take more home each pay period. Everything I read (including your post) recommends that I claim 2 allowances – which is most beneficial and ensures I don’t owe taxes at the end of the year?

  45. Hi Julisa,
    When you say he works – is he the father of your children? That’s really important. If he is not the father of your children, then you should read this: http://robergtaxsolutions.com/2012/01/can-my-boyfriend-claim-my-child-by-a-different-father-on-his-tax-return-for-the-earned-income-credit/

    Assuming that he is the father of your children, and you are a stay at home mom with no income, then most likely it would be better for him to claim the kids on taxes as you would get no benefit for them at all. He could even claim you as a dependent if you have no income and you’ve lived together for the entire 12 months of the year.

    If you have any income at all, then you’ll want to run the numbers because it could go either way depending upon how much you actually made.

  46. Hi Ellen,
    Yes, you can have your husband withhold more to cover the tax generated by your income. That’s perfectly fine. Although, if you adjust his W4 to do some catch up tax for 2016 – you’ll want to adjust again in January so you’re not over-withholding for the whole year of 2017.

  47. Hi Tamiya,
    If you claimed three that’s fine. It should just give you a bigger refund. If you need a little more take home pay instead, you can always go back and adjust your W4.

  48. Hi William,
    I think the best thing for you to do is run your numbers through a payroll calculator. See how many additional exemptions you’ll need to claim to make the numbers work – and then figure if you’ll be withholding enough to cover your taxes. Here’s a free online payroll calculator that I found. http://www.paycheckcity.com/calculator/salary/ You’ll want to make it match your current paycheck first, then you can start playing with the numbers.
    I suggest, that unless you’re pretty good with this kind of thing, that you might want to go see a tax professional and do a planning session. It’s probably worth the money.

  49. Hi Chris,
    With your incomes almost even that’s always the hardest. I don’t think it matters which one of you claims 6 and which one of you claims zero. But I would think that one of you would claim zero. I’d go to the IRS withholding calculator and see where you stand right now to see if you’re headed towards a refund or not.

  50. Hi Shirley,
    When in doubt about a part-time job I suggest claiming single with zero exemptions. Or you can do the IRS withholding calculator.

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