What is Form W-4?
Form W-4 is an important document for every US employee (including a Work and Travel program participant who works for a US company). Completing Form W-4 is required to determine which taxes will be withheld from your earnings on a weekly or monthly basis. It ensures that the company they work for correctly deducts taxes from the worker’s earnings. Thus, understanding how to fill out a W4 for dummies is essential if you work in the United States.
Depending on whether you and your partner are officially joined in marriage, whether you have individuals who rely on you for financial support, whether you have another workplace, etc. – different amounts of taxes will be deducted, i.e. the essence of this form is to find out what allowances or additional liability you have before the government.
Your employer will ask you to complete this form within the first week of your employment. You must complete a W-4 form at every job in the United States. In other words, if you are already working somewhere else, then you still need to fill out the form at every job. However, there will be some difference in how you do it if you have several jobs. Do not worry, though, because we will tell you how to fill out a W4 at your second and subsequent places of work.
How to fill out a W4
Those who started a new job on or after January 1st, 2020 and everyone who desires to update their information would need to turn in a new version of the W-4. Updating your information is also important if the data you provided earlier has changed because otherwise, your employer will be withholding the wrong amount of taxes from your paycheck.
The process of filling out the W4 form is not as complicated as it seems. A manager at the employer’s office can tell you how to fill out a W4 correctly or you can do it on your own. Let’s walk through each step of the form W4 for 2021.
- Entering basic information about yourself is what it all starts with. When specifying the address on this form, indicate the address to which you receive your mail. Form W-2 will be sent to this address unless you opt to have it delivered to you electronically. You will need a W-2 form for filing your taxes. For your status, you will need to check the appropriate one for your personal situation.
- This next step has to be completed only by those who work several jobs or are filling with their spouse who also works. By filling out this section of the form, you will know that you will be paying just the right amount of taxes.
Having two jobs, whether it is just you working two jobs or both you and your spouse, with a salary that is about the same simplifies this step because you can just mark the checkbox at point c. Otherwise, you would need to manually calculate the withholding or use an online estimator to calculate the withholding amount.
- Step three is also not completed by everyone. This is your opportunity to claim any dependents and reduce the amount of taxes withheld from your paycheck. It is perfectly okay to write “zero”. At the same time, in reality, for example, you can be the head of the family and have a spouse and children. Why might it be advantageous to write “zero”? Your employer will take the maximum amount of taxes from each paycheck. This way you will overpay your taxes and will probably get a huge refund next year. However, in this case, you kind of lend money to the government instead of investing them or using as see fit.
Why is it better to not write “zero”? If you specify as many dependents as possible, you can get more money into your pocket every month. Here, though, you need to be careful not to make a mistake. Otherwise, if you underpaid significantly, you owe a penalty in addition to the taxes you should have paid.
- This step is optional. If you desire to claim any other credits or deductions (in addition to those claimed in previous steps) or need additional withholdings, then take time to fill out this section. If you have a complicated personal financial situation, it is a good idea to first get advice on what exactly you can or should be claiming and to ensure that you are doing all the calculations correctly.
- The final step is as easy as it can get. Just add your personal signature and date and the rest is your employer’s responsibility.
It is always a good idea to get professional tax advice when filling out the W4 to make the best decisions based on the circumstances. At the same time, if you carefully read the instructions provided and do it one step at a time, the whole process is relatively simple. The ultimate goal is to learn how to fill out W4 as accurately as possible, so you would not be underpaying or overpaying the IRS.