How to fill out the new W-4 Withholding Form

How to fill out the new W-4 Withholding Form

Step 1: Enter Personal Information

This step must be completed by all employees. If an employee does not fill out the form, you are required to calculate their withholding as “Single” so you can withhold their taxes at the higher “Single” rate.



 


Step 2: Multiple Jobs or Spouse Works

The message before step two gives instructions on where to find guidance for any employees who may be exempt from withholding. If your employee asks, direct them to the language, outlined below.


This message also instructs any employees who do not need to fill out steps two through four to step five, which everyone must complete. For step 2 employees only need to complete options (a), (b), or (c). Options (a) and (b) will take employees away from the form itself, while option (c) can be done right on the form. The IRS has stated that option (a) will give employees the most accuracy and privacy of the three since the new withholding estimator will compute all the relevant entries for the form. Option (b) also provides accuracy but requires manual work, and (c) is the least accurate since it assumes the jobs have similar pay, but it's the easiest to complete.


 


Step 3: Claim Dependents
Single taxpayers with a total income of $200,000 or less ($400,000 if married and filing jointly) are eligible for the child tax credit. Employees should pay attention to the definitions in IRS Publication 972 - Child Tax Credit if they're looking to claim the credit.





Step 4: Other Adjustments




This optional section is for various things that an employee may want to account for when considering their withholding. These areas include:
  • (a): Other income (not from jobs). The additional income that might not be subject to withholding, like retirement income or dividends.

  • (b): Deductions. This line is for deductions other than the standard deduction. This includes all itemized deductions like mortgage interest and charitable contributions minus the standard deduction. Remember that, in general, the standard deduction reduces a taxpayer’s adjusted gross income to arrive at taxable income. The greater the standard deduction or itemized deductions will help reduce the amount of tax due. The 2021 standard deduction is $25,100 for married taxpayers filing jointly; $12,550 for single and married filing separately taxpayers; $18,800 for those filing as head of household.

  • (c): Extra withholding. Any extra withholding that the employee would like to withhold each pay period.

 

 

 

 






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