W-4 Tax Withholding Form

adjust your paycheck withholding

So what does W-4 mean?

  • A waffle 4-pack OR
  • A brand of washing machines OR
  • A herd of four warthogs OR
  • A place to enter your dependents on a tax return?

Actually, it is none of those things! It is most likely that the "W" in W-4 stands for "withhold" or "withholding", (to take out) but we do not know what the "4" means (or why it is there in the first place!).

The W-4 is a tax form that you complete and give to your employer (not the IRS) for federal tax (and some state tax) withholding. It tells your employer how much federal and/or state tax you wish to have withheld from each paycheck in a pay period. Your W-4 affects how big a refund you will get, or how much tax you will owe, when you file a tax return on Tax Day. The right amount of Tax Withholding is good because it keeps you from paying all your taxes at once when you file your tax return. Too much Tax Withholding will result in a tax refund - some argue it's a form of financially self imposed penalty. Clearly, the trick is to balance your Taxes - so you don't owe nor get a too big of a Tax Refund. If you are familiar with all these nerdy type of explanations and are ready to get to the bottom line start here and now: Help me figure out how to calculate and estimate my tax withholding now.

W-4 Questions, Answers, Myths and Facts

W-4 Question
Answer
Description
Why to File a W-4?
To balance taxes on the Tax Return.
As a wage earner - with the W-4 Form - you determine the amount of money you ask your employer to take out or withhold from each paycheck or each pay period as Taxes or Tax Withholding. This amount is an important factor on whether you will owe Taxes or get a Tax Refund when you e-File your next Tax Return.
When to File a new or re-File a W-4 with an existing Employer?
New wage earning job. Anytime you want to balance your Taxes.
1. As soon as you start a new wage earning job you will have to submit this form to your employer, not IRS. 
2. Anytime you want to balance your 2019 Taxes due to Life Changing Events. Use the Taxometer and pick a tax balance goal for your 2019 Tax Return due in 2020.
How to calculate or estimate the amount of Taxes to withhold with each paycheck?
1. Start the free 2019 Tax Calculator.
2. Discuss your personal Tax situation with a Taxpert, for free: Contact to an eFile Taxpert now.
To get an accurate estimate you will need to estimate your 2019 Tax Return now. Use the free 2019 W-4 Calculator for this. Simply estimate your income, dependents, deductions and tax credits for 2019 when estimating 2019 Tax Return. Based on these results adjust your paycheck witholding - up or down - for the remaining pay periods in 2019. You did this by changing the number of Allowances in 2019.
It's about how much of your hard earned money you will get to keep now in 2019 and not to get it back again in 2020, in the form of a Tax Refund. A Tax Refund in 2020 would mean you would give your hard earned money to the IRS during 2019 - through too much Pay Check Tax Withholding - just to get it back in 2020. Wouldn't you want to keep this now and be balanced in 2020? No Refund, no Taxes owed in 2020.
adjust your paycheck withholding
Explain Allowances?
These terms will go away in 2020. Let's get pragmatic here.
Until Dec. 31, 2019 you enter allowances on your W-4. More allowances means less tax withholding (and vice versa) - however, you still don't know the exact dollar amount.  Confusing, isn't it? Well, you are not alone, even the IRS has realized this and is changing this in 2020. No more Allowances - yay!
How to complete a W-4 between now and the end of 2019.
Contact us now - we have a free, pragmatic workaround for you. No complicated worksheets and no Allowance guessing.
1. Example: Your 2018 Tax Return showed a $1,200 refund and your 2019 income, deduction, etc. situation is not changing.  Take a look at your last pay check, take the tax withholding amount and decrease your withholding by $200 (monthly pay period) or $100 (bi-weekly pay period) between the remaining months of June and December 31, 2019. As a result, you should get a smaller refund in 2020 and not owe taxes but increase, your paycheck per pay period. Do the reverse if you owed taxes on your 2018 tax return. 
How to get a Paycheck workout?
1. This tool will ask simple questions and will help you figure out your tax strategy.
2. Tip: Keep your hard earned money. Don't give it interest free to the IRS and/or State only to get it back as a Tax Refund with your next Tax Return on April 15, 2020. Simply estimate your income, dependents, deductions and tax credits for 2019 and you can estimate your 2019 Tax Return now.
Don't Penalize yourself with a Tax Refund
1. Don't do what too many hard working Tax Payers do. This self imposed penalty could cost you up to 18% a year. Yes, it's self imposed by wrong financial Tax Payer planning - not eFile.com, not the IRS. Learn more about self imposed penalties.
How to Fill out your W-4?
1. Complete the W-4 and sign it now online here on eFile.com.
2. Mail, email, or hand it over to your employer(s) not the IRS or State agency. Coordinate this effort with your spouse if you are filing as married filing jointly on your next tax return.
3. Identify the State(s) to change your State Tax Withholding form(s) and download the appropriate tax withholding form(s) by State. Follow the same tax balancing strategy as you do for the IRS.
Taxpayer W-4 2019 Workaround Tip: Avoid guessing the right Number of Allowances on your W-4, instead enter a Tax Withholding dollar amount on your W-4
1. As stated earlier, Allowances as a basis to calculate your Tax Withholding will go away in 2020 on the W-4. Instead, you will be asked to enter a Tax Withholding Dollar amount instead.
2. Let's say the result of your estimated 2019 Tax Return shows that you can expect a Tax Refund in 2020 for your 2019 Tax Return in the amount of $1,200. In terms of your paycheck this would indicate that you are withholding $1,200 too much in Taxes for Tax Year 2019. Let's say there are 6 months left in 2019. If you reduced your monthly tax withholding by $200 for the remaining 6 months your Taxes should be balanced - no refund, no taxes owed. If your current monthly pay check showed $300 in tax withholding, you could change your Allowances to, let's say, 12 - this would most likely guarantee zero tax withholding - at the same time you would enter a tax withholding dollar amount on your W-4 of $100 (per monthly paycheck) or $50 per bi-weekly paycheck. In effect, you would reduce your monthly withholding by $200.
3. Disclaimer: This Workaround Tip was shared by other Taxpayers. Please contact us if you have more questions about this approach.