Bookkeeping, Payroll, Tax

BLOG

BLOG

HOW MANY ALLOWANCES SHOULD I CLAIM ON FORM W-4?

Claiming 0 Allowances:
      
•    The maximum amount of taxes withheld from each paycheck.
•    You’ll most likely get a refund back at tax time.
•    Claim zero allowances if someone else claims you as a dependent on their tax return. (For example – you’re a college student and your parents claim you.)
     
                       
Claiming 1 Allowance:
      
•    This is a good option if you’re single and only have one job.
•    You’ll most likely get a refund back.     
                       
Claiming 2 Allowances:


•    If you’re single and have one job, claiming two allowances is also an option.
o    You may get closer to your exact tax liability (aka: break-even), but you need to be careful because this could still result in some tax due.
•    If you have more than one job and are single, you can either split your allowances (claim 1 at Job A and 1 at Job B), or you can claim them all at one job (claim 2 at Job A and 0 at Job B).
•    If you’re married, you can claim two allowances – one for you and one for your spouse.
o    If you and your spouse expect to file a joint return and you’re both employed, you will only complete one set of W-4 forms. Add your combined income, adjustments, deductions, exemptions and credits to figure your withholding allowances. You can divide your total allowances whichever way you prefer, but you can’t claim an allowance that your spouse claims too.
o    If you’re married filing separate returns, use separate W-4 worksheets and figure your allowances based on your own individual income, adjustments, etc.    
                       
Claiming 3+  Allowances:


•    If you’re married and have a child, you should claim three allowances.
•    If you’re married with two children, you should claim 4 allowances… so on and so forth.
 
If you have a trickier situation like additional tax credits or multiple jobs as mentioned earlier, then the two other worksheets will be helpful.

If you expect to itemize your deductions, claim certain tax credits or income adjustments, use the Deductions and Adjustments Worksheet to assist you. This includes claiming head of household, $2,000 or more in the child or dependent care expenses, or eligibility for the Child Tax Credit.

If you’re single with more than one job or if you and your spouse both work, then refer to the Two-Earners/Multiple Jobs Worksheet.

Note: The worksheets are only to help you figure amount of withholding allowances you should claim. They are for your own records and shouldn’t be given to your employer.


When a life change occurs, it’s very important to update and make adjustments to your W-4. You can make changes anytime during the year, and some events require you to give your employer a new W-4 within 10 days. Here and look under “Changing Your Withholding” to see these eligible events.

 

Jenny Hardin