Form W-4, the Employee's Withholding Certificate, tells your employer how much federal income tax to withhold from your pay. Everyone completes Step 1 (personal details and filing status) and Step 5 (signature); Steps 2 to 4 are only for people with more than one job, dependants, other income or extra deductions.
It's the form you get on your first day, and it's the reason some people get a refund every spring while others get a bill. The IRS suggests completing a new one each year and whenever your personal or financial situation changes.
What changed, and why allowances disappeared
If you remember claiming 'allowances', that version has gone. The IRS says allowances are no longer used on the redesigned W-4, because their value was tied to the personal exemption, which you can't currently claim. The form now asks for dollar amounts instead, which is more accurate but feels less familiar.
The five steps on the W-4
| Step | What it covers | Who needs it |
|---|---|---|
| Step 1 | Name, address, Social Security number and filing status | Everyone |
| Step 2 | Multiple jobs, or you and your spouse both work | Only if it applies |
| Step 3 | Credits such as the child tax credit or credit for other dependants | Only if it applies |
| Step 4 | Other income not subject to withholding (4a), deductions beyond the standard deduction (4b), extra tax to withhold each paycheck (4c) | Only if it applies |
| Step 5 | Signature | Everyone |
If you fill in only Steps 1 and 5, the IRS says your withholding is worked out from your filing status's standard deduction and tax rates, with no other adjustments. That's fine for one job and no complications, and it's where people with a second job or a working spouse can end up under-withheld.
The multiple jobs part people get wrong
Step 2 is there because two incomes taxed separately look smaller to each payroll than they are together. The IRS gives you three options, and they trade accuracy against privacy and effort:
- Step 2(a): use the IRS Tax Withholding Estimator. The IRS calls this the most accurate and private option. It gives you an extra amount to enter in Step 4(c) on the W-4 for one job only.
- Step 2(b): use the Multiple Jobs Worksheet on page 3 of the form. Roughly accurate, keeps your other income private, and generally better than 2(c) if one job pays more than double the other.
- Step 2(c): tick the box on the W-4 for both jobs. Simplest, and the IRS says it's more accurate when the two jobs pay about the same, but it only works for a total of two jobs held at the same time.
Whichever you choose, the IRS warns that if pay at any of the jobs changes significantly, you'll need to redo it and give your employer a new W-4.
One more rule from the form's own instructions: in a household with more than one job, make the Step 3 to 4(b) adjustments on one W-4 only, and the IRS says withholding is most accurate if you put them on the W-4 for the highest paying job.
Keeping other income private from your employer
Step 4(a) asks about income like investment earnings, and plenty of people would rather their employer didn't see it. The IRS offers ways round that: use the Tax Withholding Estimator and enter only the extra tax in Step 4(c), or work out the extra tax yourself with Publication 505, divide it by your number of pay dates and enter that in Step 4(c). Either way, your employer sees a number, not your income.
The simplest way to have more tax taken
If you'd rather have a refund than a bill, the IRS says the simplest way to increase withholding is to enter an extra amount per paycheck in Step 4(c). It's a blunt tool, but it's handy if you have side income or freelance work on top of a salary. If that side income is self-employment, my guide to 1099 versus W-2 income explains why it isn't withheld at source.
Not the right W-4?
The IRS keeps separate forms for other kinds of payment: Form W-4P for periodic pension or annuity payments, Form W-4R for nonperiodic payments and eligible rollover distributions, and Notice 1392 with supplemental W-4 instructions for nonresident aliens. Employers who work out withholding by hand use Publication 15-T, Federal Income Tax Withholding Methods.
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For employers: what to do with W-4s
- Every new employee first paid after 2019 must use the redesigned form.
- If a new hire never hands one in, the IRS says to treat them as a single filer with no other adjustments.
- Employees who gave you a W-4 before 2020 don't have to give you a new one just because the form changed, and you keep withholding on the old one until they do.
- You can ask longer-serving staff to complete the new form, but the IRS says you should explain they don't have to, and that if they don't, withholding carries on under their old form.
Keep each W-4 with your payroll records; you don't send it to the IRS. If you run payroll yourself, free payroll software will usually turn the W-4 entries into the right withholding automatically.
My verdict
For one job and no dependants, Steps 1 and 5 really are enough. For anything else, spend a few minutes on the IRS Tax Withholding Estimator and copy its Step 4(c) figure onto one W-4. Then set a reminder to redo it next January, or the day your pay, your household or your side income changes.
Frequently asked questions
Must I fill out every step of the W-4?
No. The IRS says only Step 1 and Step 5 are required for all employees. Steps 2 to 4 are for people they apply to.
Can I still claim allowances on a W-4?
No. Allowances are no longer used on the redesigned Form W-4. It uses dollar amounts instead.
What happens if I don't give my employer a W-4?
For employees first paid after 2019, the IRS says the employer treats you as a single filer with no other adjustments.
How can I get more tax withheld?
Enter the extra amount you want withheld from each paycheck in Step 4(c).
Do I need a new W-4 every year?
It isn't required, but the IRS suggests completing a new one each year and when your personal or financial situation changes.
Which multiple jobs option is most accurate?
The IRS says the Tax Withholding Estimator in Step 2(a) gives the most accurate and private result.
