What you need to know about your W-4 form (even if you aren’t starting a new job)

The W-4 form you fill out when you start a new job lets your employer know how much tax they should withhold from your paycheck. It is important to note that you should also fill out a new W-4 form any time you have changes in your financial or personal circumstances.

Filling out the form correctly is important because if you don’t withhold enough tax, you could end up owing a large sum to the IRS at the end of the year. On the other hand, if you overpay withholding you are temporarily giving money to the government that you could use for things like paying bills or investing.

The IRS issued a new W-4 for 2020. (Note: You do not need to fill out a new W-4 if your employer already has your old form on file.) The new form eliminated the ability to claim personal allowances (with the old form, the more allowances you claimed, the less your employer withheld from your check; the fewer allowances you claimed, the more your employer withheld) and no longer uses a worksheet to calculate your withholding amount.

The new form is designed to make determining how much your employer withholds easier. If you are single, have a spouse who does not work, do not have dependents, have income from only one job, and are not claiming tax credits or itemizing deductions other than the standard deductions, all you have to do is provide your name, address, Social Security number and filing status.

If your situation is more complicated, the IRS recommends using their Withholding Calculator to determine how to accurately fill out the form. The IRS website also provides FAQs with information on filling out the form.

There are a number of situations in which you should fill out a new W-4 form. They include:

  • Taking on side employment that will increase your overall income
  • Getting married or divorced
  • Having or adopting a child

Starting a job in the middle of year (if you were not employed earlier the year) also affects how you fill out your W-4 form. If you will be employed for no more than 245 days in the year, you can request that your employer use the part-year method to compute withholding. That way you will not have too much money withheld from your check and will avoid having to wait until tax time to have that money returned to you.