We continue to get a ton of questions each week on how to fill out a W-4, W-4P, and W-4MN.
The following is some information outside of these instructions that are provided with the forms. Please note, if you have multiple sources of income, you should be reviewing each source and their withholding to see if they should all be revised. There is no “one size fits all” so a lot of times you will need to fill out the forms based on what you know, and then revise it for your next payment to adjust it so additional income tax withholding may need to come out. For us it is hard for us to make a recommendation on how to fill this out until we see what is being withheld on the first check with the revised withholding.
Federal Form W-4
Beginning in 2020 there were changes to this form that changed the way your withholding is calculated. The IRS does have a tool available at https://www.irs.gov/individuals/tax-withholding-estimator that can help calculate how you should fill out your W-4 most accurately. If not using this tool, the following are some general rules of what you need to consider when filling out this form or to make any changes to your withholding. The forms instructions may help you as well.
- Step 1, Section C – This section is used to indicate if you want to withhold at the single, married filing joint, or head of household withholding rates.
- Step 2 – This box is usually checked if you work two or more jobs.
- Step 3 – The newer withholding tables do not account for the number of dependents (allowances) that you claim on your tax return. For example, In the past if you were single with 1 dependent you would claim “Single 1” on your W-4. As a result, the following are some tips (please read all the information about this step):
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- Children Under 17 Claimed As Dependents – If you are claiming one or more children under age 17 on your tax return you should multiply the number of children by $2,000. For example, if you have 3 kids, you will enter $6,000.
- Children Age 17 or Older Claimed As Dependents – If you are claiming one or more children age 17 or older on your tax return you should multiply the number of children by $500. For example, if you have 3 kids, you will enter $1,500.
- Enter the total of these on Line 3
- To prevent under withholding, we have the following recommendations as a general rule based on experience with our tax clients:
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- If you are married, both you and your spouse should not fill out this section, only one of you (generally, the higher income earner) should if you want to reduce your withholding by the amount of the child tax credit you will receive when you file your tax return, this allowing you to take home more income throughout the year and have less taxes withhold. Often, if you have a dual person income or are working multiple jobs, we advise in most cases not to fill out this section. If you are unsure, you should meet with your tax preparer as to how you should fill out this section.
- If you are working part-time or have multiple jobs or have a dual income home, you may want to check single to maximize your withholding if you and your spouse make significantly different income even if you are married to maximize your withholding since it may not withhold taxes if you have other sources of income or multiple jobs.
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- Step 4
- 4A – Enter the amount of other income you expect to earn from additional sources of income (multiple jobs, Investment Income, Etc.)
- 4B – If you will only be claiming the standard deduction (and not itemized deductions) on your income tax return when you file, or are not sure if you claim itemized deductions, we generally recommend you leave this blank since a significant majority of clients only take the standard deduction.
- 4C – if you work multiple jobs or are filing a joint return that has income for both spouses, complete section 2(b) of your Multiple Jobs Worksheet to help determine if you will need extra taxes taken out each tax. There is no universal number that goes here, and each taxpayer is different, so this needs to be figured out on an individual basis if you have multiple sources of income.
W-4MN
- Employee Information – Indicate if you want to withhold at the single, married (filing joint), or married at the single rate.
- Section 1 – Complete this based on the information on lines A through F. If you are unsure, we recommend you talk to your tax preparer on this section if you are unsure on how to fill this out. We cannot offer advice on what you should put in these boxes.
- Section 2 – Complete this section ONLY If you expect to have zero taxable income during the tax year and do not want any Minnesota income tax withheld and check the applicable for A through F.
Federal Form W-4P (Retirement Accounts)
The following are some general rules of what you need to consider when filling out this form or to make any changes to your withholding. Please read the instructions as they will assist you if you have multiple sources of income but are not filling out forms for each source.
- Step 1, Section C – This section is used to indicate if you want to withhold at the single, married filing joint, or head of household withholding rates.
- Step 2 – Please read the instructions as they will assist you if you have multiple sources of income but are not filling out forms for each source.
- Step 3 – The newer withholding tables do not account for the number of dependents (allowances) that you claim on your tax return. For example, In the past if you were single with 1 dependent you would claim “Single 1” on your W-4. As a result, the following are some tips (please read all the information about this step):
-
- Children Under 17 Claimed As Dependents – If you are claiming one or more children under age 17 on your tax return you should multiply the number of children by $2,000. For example, if you have 3 kids, you will enter $6,000.
- Children Age 17 or Older Claimed As Dependents – If you are claiming one or more children age 17 or older on your tax return you should multiply the number of children by $500. For example, if you have 3 kids, you will enter $1,500.
- Enter the total of these on Line 3
- To prevent under withholding, we have the following recommendations as a general rule based on experience with our tax clients:
-
-
- If you are married, both you and your spouse should not fill out this section, only one of you (generally, the higher income earner) should if you want to reduce your withholding by the amount of the child tax credit you will receive when you file your tax return, this allowing you to take home more income throughout the year and have less taxes withhold. Often, if you have a dual person income or are working multiple jobs, we advise in most cases not to fill out this section.
- If you are working part-time or have multiple jobs or have a dual income home, you may want to check single to maximize your withholding if you and your spouse make significantly different income even if you are married to maximize your withholding since it may not withhold taxes if you have other sources of income or multiple jobs.
-
- Step 4
- 4A – Enter the amount of other income you expect to earn from additional sources of income (Rental Income, Investment Income, Etc.)
- 4B – If you will only be claiming the standard deduction (and not itemized deductions) on your income tax return when you file, or are not sure if you claim itemized deductions, we generally recommend you leave this blank since a significant majority of clients only take the standard deduction.
If you have any questions or concerns please contact our office at 651.257.2152