How to Fill Out a W-4 So You Don't Owe at Tax Time
Your Form W-4 tells your employer how much federal income tax to take out of each paycheck. Get it wrong and you'll owe in April, or give the government an interest-free loan all year. Here's how to fill it out.
By the Enrolled Agents and CPAs at A&W Tax Services · Updated
The five steps
- Step 1: your name, address, Social Security number and filing status
- Step 2: check the box or use the worksheet if you have more than one job, or you're married filing jointly and your spouse works
- Step 3: claim the Child Tax Credit and credit for other dependents
- Step 4: add other income such as interest or a side business, deductions beyond the standard deduction, or extra withholding per paycheck
- Step 5: sign and date it
Two jobs or two incomes
The most common reason people owe is two incomes in one household. Each employer withholds as if that job were your only income, so too little is taken out overall. Check the Step 2 box on both W-4s if the jobs pay about the same, or use the IRS Tax Withholding Estimator for a more accurate figure.
Side income and self-employment
If you earn money from a side business, rideshare driving or freelance work, you can cover the tax by adding extra withholding in Step 4(c) instead of making quarterly estimated payments. Withholding is treated as paid evenly through the year, which can also help avoid an underpayment penalty.
When to update your W-4
- You start a new job or a second job
- You get married or divorced
- You have a baby or a child stops being your dependent
- You start a side business or your income changes a lot
- You owed money or got a very large refund last year
Claiming exempt
You can claim exemption from withholding only if you owed no federal income tax last year and expect to owe none this year. An exempt W-4 expires, so you must give your employer a new one by February 15 each year. Texas has no state income tax, so there's no state withholding form for Texas jobs.