How to Fill Out a W-4 Form (Without Errors that Would Cost You)

Think you know how to fill out a W-4 Form like the back of your hand? You may need to think again.

The W-4 Form has changed significantly in 2020, it’s first major revamp in 30 years. The changes are meant to make the form more straight forward and accurate. But your first time filling it out could still be confusing, especially if you’ve been using the old form for years.

The W-4 Form tells your employer how much tax should be withheld from your paycheck. One of the biggest changes to the W-4 Form 2020 is that there are no more allowances. Instead, taxpayers essentially fill out a mini tax return, marking all the deductions and credits they qualify for. The new form also pays more attention to helping workers with multiple jobs better predict their proper tax withholding. 

Let’s take a close look at what a W-4 is, how the form has changed, and how to fill it out.

What is a W-4 Form?

When you start working for a W-2 employer, one of the first documents they’ll usually ask you to fill out is a W-4. This form tells your employer how much taxes should be withheld from your paycheck.

Filling out an accurate W-4 is important because if your employer withholds too little, you could owe money to the IRS when you file your tax return (and possibly tax penalties as well.)

And, on the other hand, if too much tax is withheld, you could end up with a big refund. That’s not necessarily a terrible thing, but it does mean that you will have essentially given the IRS a big interest-free loan.

How Has the New W-4 Form 2020 Changed?

If you’ve been using the old W-4 Form for a long time, here are the two biggest changes that you’re likely to notice when you see the new form.

Download a copy of the new form from the IRS here if you want to check it out for yourself

Elimination of Allowances

The biggest change to the W-4 Form is that are no more “allowances.” With the old form, the more allowances that you claimed, the less tax would be withheld from your paycheck. But allowances were partly based on personal exemptions which is a problem because they were eliminated when the Tax Cuts and Jobs Acts was passed in 2017.

But even if personal exemptions hadn’t been eliminated, the whole concept of allowances was pretty confusing. I can vividly remember working on my first W-4 Form and being completely baffled by the allowances question. So for the interest of simplicity and transparency, a new system was needed.

It’s important to point out, however, that “simpler” and “easier to understand” doesn’t necessarily mean shorter. The new W-4 Form is decidedly longer than the old form.

You’ll be asked to provide more information about your income, deductions, and eligible credits to help you accurately set your withholding amount. In fact, working on the new W-4 Form feels almost like filling out a mini-tax return.

New “Multiple Jobs” Worksheet

Another big change to the W-4 is the inclusion of an extra worksheet where you can add up your income from multiple jobs. It can be difficult for side hustlers with two or three incomes to accurately estimate their withholding amount. So this new worksheet is meant to help with that.

Related: 52 Ways to Make Extra Money

How to Fill Out the New W-4 Form 2020

There are five possible steps to filling out the new W-4 Form 2020. Step 1 and 5 is required for everyone. But you only need to complete steps 2-5 if they apply to you. Here’s what you need to know.

1. Enter Personal Information

This step is pretty simple. First, you’ll need to provide your name and address information.

Second, you’ll need to select your filing status. The W-4 Form has three filing statuses to choose from: Single or married filing separately, Married filing jointly (or qualifying Widow(er)), or Head of Household.

W-4 Form

Technically, this is all the information that you’re required to fill out on your W-4 Form. If steps 2-4 don’t apply to you, you could skip down to step 5 (Sign and date). However, there’s a good chance that at least one of those “in-between” steps will apply to you.

2. Multiple Jobs or Spouse Works (Optional)

You’ll need to fill out the second section if you have more than one job or your spouse works and you plan to file your taxes jointly.

There are two ways to complete this step. One way is to use the new Multiple Jobs Worksheet found on Page 3 of the new W-4 Form. 

But what if you don’t want your main employer to know that you have a second job?

In that case, you can use the IRS estimator instead. In fact, the IRS recommends that if you want the most accurate withholding, you should use their estimator. Also, if you only have one additional job and your incomes from both are similar, you can just check the box shown below.

W-4 Form

But for this shortcut to work, you’ll need to make sure to check this box on both employers’ forms.

3. Claim Dependents (Optional)

Next, you’ll need to claim your eligible dependents. For this section to apply to you, your income must be less than $200,000 (or $400,000 for married filing jointly taxpayers).

For each qualifying child under age 17, you’ll multiply by $2,000. And you’ll multiply your number of other dependents by $500. So if you have 2 qualifying children and 1 additional dependent, your total deduction amount for this step would be $4,500. 

4. Other Adjustments (Optional)

This fourth step is intended to account for less common income adjustments. In this step, you can direct your employer to withhold taxes for non-job income like interest and dividends.

Do you plan to itemize your deductions instead of taking the standard deduction? If so, you can account for that in this step as well. To more accurately predict the deduction amount for itemizers, the 2020 W-4 has included a new “Deductions Worksheet” (also on page 3).

If you’d like for your employer to withhold extra tax for any other reason whatsoever, you can enter a specific amount in this section as well.

5. Sign and Date

This step is self-explanatory. Just add your signature and mark the date.

That’s it, you’ve just completed your W-4 Form! The bottom section will be filled out by your employer. That wasn’t too bad, right?

Does Everyone Need to Fill Out a New W-4 Form?

No, not necessarily. Only employees who start jobs with new employers in 2020 are required to fill out a new W-4 form.

If you’re working for the same employer as last year, they can just continue to withhold the same amount as you instructed them to withhold when you filled out the old form.

However, life changes like getting married or having kids can change the amount you should be withholding. So the IRS recommends that taxpayers consider filling out a new W-4 each year to ensure that amount of taxes being withheld is still right for their situation.

The Bottom Line

The new W-4 Form 2020 can seem more daunting at first glance. But, ultimately, the changes should result in more accurate withholding amounts and help you avoid big income tax deficits or refunds during tax return season. But if you do end up with a big tax refund, here are 9 great ways to spend it.

Have you encountered the new W-4 yet?

How to fill out a W-4
Avatar About Philip Taylor, CPA

Philip Taylor, aka "PT", is a CPA, blogger, podcaster, husband, and father of three. PT is also the founder and CEO of the personal finance industry conference and trade show, FinCon.

He created Part-Time Money® back in 2007 to share his advice on money, hold himself accountable (while paying off over $75k in debt), and to meet others passionate about moving toward financial independence.

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  1. My son (has dependent son) is filling out his W4 for a job and I went through everything that applies to him and I came up with 6 exemptions.  Is this correct?

  2. I just recently got married and my husband has two part time jobs and I have a full time job.  I want to know what I should claim as an allowance to have the right amount taken out to where I don’t owe money but don’t have more than necessary taken out.

  3. I did my taxes online and when I put in the money info for my husband and myself we owed, this is what we do, we both work I let them take out the maximum he let them take out whatever is required plus extra from his paycheck and we still owe, what you think we have done wrong on the w4 or should have done ?

  4. No penalties.