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.
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.
(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.