What Is Form W-4?

How Does Form W-4 Work?

Previously called the “Employee’s Withholding Allowance Certificate,” Form W-4 is the "Employee's Withholding Certificate." The Internal Revenue Service (IRS) issued a revised version of the form in 2020. It was intended to increase transparency, simplicity, and accuracy. This version remains in place in 2023.

The form consists of five sections. You’re only required to complete sections one and five but completing additional sections can help your employer more accurately determine the appropriate amount to withhold from your paychecks.

Example of Form W-4

Steps 1 and 5 are the mandatory sections of Form W-4 that must be completed. The other three steps finetune your withholding for your personal situation:

• Step 1 (REQUIRED): This is where you’ll enter your name, address, Social Security number, and tax filing status. 
• Step 2: This step takes into consideration extra income from other jobs and/or your spouse’s job if you’re married and filing a joint tax return. 
• Step 3: This step is used to estimate credits you receive for any dependents you might have. You can include the amounts of other credits you anticipate receiving as well, such as education credits. Completing this step will reduce your withholding.
• Step 4: In this step, you can include extra income (not from other jobs or self-employment) from which tax isn't withheld. This will increase your withholding. You can also include how much you intend to claim in deductions other than the standard deduction. This will decrease your withholding. If you want a specific additional amount withheld from your paycheck, you can indicate it in this step as well.
• Step 5 (REQUIRED): This is where you sign the form.

What Is Step 4(c)?

Step 4(c) allows you to request extra withholding above what would normally be withheld from your pay.

You might increase how much is withheld if you owed the IRS money when you last filed your return. You could divide the amount you owed by the number of pay periods remaining in the year to avoid a future tax bill. You could submit a new W-4 to have your employer withhold an additional $84 from each of your paychecks if there are 36 pay periods left in the tax year and you owed $3,000 last year.

If you want less withheld because you anticipate getting a refund, you can use step 4 to indicate the additional deduction amount you expect to claim over and above the standard deduction for your filing status. Your employer can use this information to calculate a new withholding amount that would leave more in your paycheck but would reduce or eliminate your tax refund.

Who Uses Form W-4?

Your employer uses the information you enter on Form W-4 to determine what percentage of your pay should go to income taxes. All employees receive this form if taxes are to be withheld from their pay, regardless of whether they work full or part time.

Several factors influence the amount of income tax that’s withheld, including your filing status and how many dependents you have. Your employer would withhold more to cover your tax liability if you’re single with no dependents than if you’re married or you’re head of household with one or more dependents, assuming all other information is identical. Having more withheld means a smaller paycheck.

Your employer also withholds additional money to pay your Federal Insurance Contributions Act (FICA) taxes, which cover Social Security and Medicare. Social Security and Medicare taxes are statutory percentages. They aren't impacted by the information you include on the W-4.

Types of W-4 Forms

Form W-4

Employees who already had a W-4 on file from previous years didn't have to complete the revised 2020 form, but you can do so if you want to change their withholding. You must use the revised form in this case, as must all newly hired employees. 

Form W-4 (SP)

Form W-4 (SP) is a Spanish version of the standard W-4. Aside from the change in language, the form is exactly the same as Form W-4.

Form W-4P

You would use Form W-4P if you receive income from pensions, annuities, or certain other deferred compensation. Submit this version of the W-4 if you want your plan administrator or employer to withhold taxes from a pension or annuity.

Form W-4S 

Your employer might ask you to complete this version of the form if you also want them to withhold taxes from any sick pay to which you're entitled.

Form W-4V

Form W-4V is voluntary. You can use it to ask the payer to withhold federal income tax from government payments you might receive, such as Social Security or unemployment income.

Where To Get Form W-4

Your employer should provide you with a blank Form W-4 to fill out, along with its accompanying worksheets. You can also download the form from the IRS website's "Forms and Publications" page.

If You’re Exempt From Withholding

If you’re exempt from tax withholding, Form W-4 provides a space you can use to indicate this. First, confirm that you're exempt by reviewing Form W-4 instructions under “Exemption from withholding.” You're exempt for the 2022 tax year if:

• You had no federal income tax liability for tax year 2021
• You expect to have no federal income tax liability for tax year 2022

Write "Exempt" in the space below Step 4(c) in this case. Complete steps 1(a) and 1(b) and step 5. You must complete and submit the form even if you're exempt.

Check with a tax professional before claiming an exemption to make sure you meet the qualifications. You could owe a penalty otherwise. You'll have to redo your W-4 each year to indicate that you qualify as exempt for that particular tax year if you are exempt.

How To File Form W-4

You don't have to file Form W-4 with the IRS. Simply complete it and give it to your employer. You must do this when you begin working for the company, but you can also submit a new one if your circumstances change or you otherwise want to adjust your withholding.

Frequently Asked Questions (FAQs)