So what is the correct W-4 withholding for me?


The easiest answer is - whatever gives you the desired result at year-end. Some clients prefer large refunds, some small refunds, and a couple would rather owe (no kidding). I will make the assumption you would prefer a small refund. Anyway, here are some common mistakes to avoid:


2020 (and future) Update - The "new" Federal W-4 uses dollar amounts instead of exemptions - so a child under 17 years old is $2000 and all other dependents are $500. So substitute these dollar amounts in place of the number of dependents as appropriate.


1) The more exemptions ($$$) you claims, the LESS tax is withheld. Claiming S-0 will result in the MAXIMUM tax being withheld. Claiming M-9 will result in the MINIMUM tax being withheld. If you claim "EXEMPT" then NO tax will be withheld.


2) If you are a two-income household and both work, do NOT used the married tax tables. Those assume you have a non-working spouse. If there are just two of you on the tax return (and nothing else - no kids, no house, etc..) and your incomes are nearly equal, both of you claiming S-0 (single with zero dependents) will result in just enough tax being taken out so you do not owe. BTW "Single" and "Married but withhold at the higher Single Rate" are IDENTICAL. The W-4 is not a legal document attesting to your marital status. You are just telling the IRS how much money to withhold from your paycheck.  If you both claim M-0 (married with zero dependents) you are EACH claiming yourself plus a non-working spouse (that's what the "M" does) and that is two dependents who don't exist and you'll end up with a big tax bill at the end of the year.  If only one spouse works and you file MFJ then that person may claim M-0 and you won't owe when you file.



3) If you work a second (or third) job claim S-0 at ALL of those additional jobs. Same reasoning as above - someone who makes $5K per year would owe no tax.  But add that to your $45K primary job and the tax rate on the $5K needs to be the tax rate on your total income which is $50K.  Job "A" does not know about Job "B" or Job "C".  Plan accordingly.


4) When I do your tax return, part of the job is planning for any and all changes that may occur the following year. I can easily show you the effect of adding a child, house, going to school, whatever - and how to adjust your W-4 accordingly. The above are general guidelines only.