How Many Allowances Should I Claim on My W4?
When individuals start a new job, their employer asks them to complete a W-4 form for the IRS. On this Employee’s Withholding Allowance Certificate, workers indicate the number of allowances they’re claiming. According to CPAs in San Diego, that number determines how much money is withheld from paychecks for federal income tax purposes.
The three most common factors affecting allowances are number of jobs held, number of dependents, and filing status. When more allowances are claimed, less money is withheld from paychecks and the greater the likelihood the employee will have to pay additional taxes come tax time.
Fewer claimed allowances mean that more money is withheld from paychecks. There’s a greater likelihood of a refund. Accuracy is important because employees who fill out their W-4 incorrectly, resulting in insufficient withholding, are subject to penalties.
Claiming 0 or 1
Employees who are claimed by someone else, enter 0 as the number of allowances. Single employees with one job can claim one allowance or two. Claiming two may result in owing taxes. A single individual with two jobs can claim one exemption on each job or both exemptions on one job, usually the higher-paying one.
Claiming 2 or More
Married couples filing jointly can claim two allowances and fill out one W-4 if they’re both employed. Each spouse in a couple that files separately completes a W-4. Married couples with one child can claim three allowances. Couples with two children can claim four and so forth.
Additional allowances are available for employees filng as head of household and for people who will claim expenses for childcare.
The W-4 includes worksheets so all taxpayers can make estimations based on their exemptions, credits, and other factors. These private worksheets are for the employees’ eyes only.
Incorrectly filing your taxes puts you at risk for penalties. If you need help when it comes time to file or you are seeking IRS collections relief, call R.A. Michael and Associates at (844) 780-1100. We can help you not only file your taxes correctly, but resolve any challenging issues with the IRS. Schedule a free consultation today.