Takeaways
- Form W-4s tell employers how much federal tax to withhold from your paycheck.
- Form W-4 uses your tax filing status, dependents, and tax credits.
- Form W-4 elections can cause over or underpayment of taxes.
- New employees must complete Form W-4 with each new employer.
- Form W-4s can be adjusted after significant life events like marriage or having children.
What Is a Form W-4?
A Form W-4 is an Internal Revenue Service (IRS) form that employees fill out to indicate their tax filing status, number of dependents, tax credits, and other withholdings to their employer. This form is also called an Employee's Withholding Certificate. [1]
Employers use this information to determine how much federal tax to withhold from your paycheck. New employees fill out Form W-4 and can use the IRS Tax Withholding Estimator as a guide for filling out their forms.
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How a Form W-4 Works
When you get a new job, your employer will ask you to complete a form W-4 as part of your new hire process. A form W-4 impacts how much federal income tax your employer withholds from your paycheck.
Your employer needs the information on this form to accurately calculate how much in taxes to send to the IRS and how much to give to you each paycheck. Your Form W-4 elections impact how much take-home pay you will receive each paycheck.
You can get as close to your exact taxes as possible using the calculations on this form.
If you withhold too much tax, you will most likely get a tax refund when you file your taxes. However, you will have a tax liability and possibly penalties if you do not withhold enough taxes from your paycheck.
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What Is Contained in a Form W-2?
5 Steps to Fill Out W-4
The IRS includes instructions on calculating your withholdings on the form, but this can sometimes take time to understand. In 2020, the IRS redesigned Form W-4 to make it more clearly understood.
The IRS states that the new form “reduces the form's complexity and increases the transparency and accuracy of the withholding system. While it uses the same underlying information as the old design, it replaces complicated worksheets with more straightforward questions that make accurate withholding easier for employees.”[2]
Here's how the form works:
Step 1: You provide your name, address, social security number, and expected tax filing status. Your name must match the name on your social security card. If it does not, you need to contact the Social Security Administration.
Step 2: If you have multiple jobs or if your spouse is also employed and you file “married jointly,” you will calculate your withholdings based on your combined salaries.
Step 3: Next, you must calculate your dependents, including children and other qualifying dependents. It would help if you also considered your eligibility for potential tax credits.
Step 4: If you have additional income or deductions you want to be included in calculating your tax withholdings, you can include them here. In this section, you can specify if you wish to have additional tax funds withheld from your paycheck. Extra withholdings can act as a "catch-all."
Step 5: Once you have filled out the form, you must sign and date it. The form must be signed to be considered valid. Your employer also signs the form, citing your employment date and the company's Employer Identification Number (EIN).
What if I Don’t Fill Out My W-4?
If you do not fill out a W-4 form, you will still get a paycheck, but your withholdings will default to a single filer with zero allowances.
A single tax filer with zero allowances will have the most money withheld from their paycheck. If you do not fall into this category, you need to complete your W-4 form with accurate withholding information.
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When to Update My W-4?
It is a good time to re-examine your Form W-4 status after any significant life event. Life events include getting married, having a baby, or getting divorced. These life events could trigger a change in your tax status. Changes to your income, an increase or decrease, is also another opportunity to examine your Form W-4.
You must also fill out a new W-4 form if you change jobs. Even though the IRS issues the form, your new employer requires you to fill out a new form. New employers cannot get your personal information from the IRS or your previous employer.
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Your employer's human resources department can help you when you need to update your W-4 form. Your employer should update your withholding amount by your next pay period or within 30 days.
Ultimately, your Form W-4 helps inform your Form W-2, which will help you file your taxes accurately.
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How to Adjust My W-4?
If you file your yearly tax return and see that you are getting a large refund, that may mean you need to adjust your Form W-4. Sometimes, a big tax refund means you are overpaying your taxes throughout the year.
You may like getting a big check from the government once a year, but you could benefit from that money throughout the year. For example, you could invest that money in stocks, certificates of deposits, or high-interest bank accounts to earn interest income.
Luckily, you can update your W-4 form any time throughout the year and as many times as you need. Your employer's human resources department can help you when you need to update your W-4 form. Your employer should update your withholding amount by your next pay period or within 30 days.
Smart Summary
A W-4 form is an IRS form you fill out as an employee to inform your employer how much federal tax to withhold from your paycheck. You can update the form as often as needed. Whenever you experience a life event or significant change in income, you should update your Form W-4. Contact your human resources department to help you with this process.
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(1) Internal Revenue Service. Employee’s Withholding Certificate. Last Accessed January 12, 2025.
(2) Internal Revenue Service. FAQs on the 2020 Form W-4. Last Accessed January 12, 2025.
