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How to Fill Out a W-4 Properly and Avoid Owing the IRS

Updated: Oct 23, 2021

I've noticed in my time of being a tax professional, even before I became an EA, that one reason that people owe the IRS is because they don’t know how to account for the taxes that need to be paid for their income level. Simply put, they don’t know how to properly fill out their W-4 when they are an employee and/or they don’t know how to calculate and make estimated tax payments if they are self-employed. Instead of learning, they take a chance at it possibly being right and this is where they mess up.

You can’t afford to chance something when it comes to dealing with the IRS. You need to know what you’re doing or hire a professional that knows what they are doing and will clearly communicate with you the things they need from you to ensure you are on the right track with the IRS. Today we’re going to cover:

  • What is a W-4

  • Who is Exempt From Withholding

  • How to Fill Out a W-4 When You're Single

  • How to Fill Out a W-4 When You're Married

This post is for informational purposes only. Consult your tax professional or the IRS website about your specific tax situation.

What is a W-4

The W-4 is a tax form used by your employer to tell them how much of your income you would like withheld and paid to the IRS. If too little is withheld you generally will owe when you file your tax return, which can result in an underpayment penalty. On the flipside if you withhold too much you will generally get a refund. After the Tax Cuts and Jobs Act was passed the W-4 was designed to help taxpayers receive more of their money throughout the year so following the instructions on the form will result in getting as close as possible to breaking-even, not owing and not getting a refund.

It is important that you fill out a new W-4 each time you start a new job and each time there is a major life change. For example, if you get married your standard deduction will be doubled. If you have a child you will now be eligible for the child tax credit, and if you purchase a home you may now be eligible to itemize deductions on your return. Making note of all these types of changes on your W-4 is important to make sure that you do not have too much money withheld during the year. Unless of course you are a taxpayer that enjoys getting a big tax refund.

Who is exempt from withholding

Not all taxpayers are obligated to have taxes withheld from their wages. These taxpayers may be exempt from withholding on their W-4. Being exempt is not common but you are eligible if you meet the following criteria:

  • You had no federal income tax liability in the prior year and you don’t expect to have on this year

  • You had no federal tax liability in the prior year (2020) if your total tax on line 24 of your 1040 or 1040-SR is 0 OR

  • You were not required to file a return because your income was below the filing threshold for your filing status.

  • You agree to have no taxes withheld from your wages

If you meet these criteria, congratulations you may file exempt! Beware: this means that NO taxes will be withheld from your wages. You may write “Exempt” in the space below step 4(c). Complete Steps 1(a), 1(b), and 5. You’re all done 😊.

If you don't qualify to file exempt, keep reading...

W-4 Page 1

How to Fill Out a W-4 When You're Single

For the sake of time I won't be able to go through every possible scenario of a single person but if you would like for me to go into further detail in another post let me know in the comments!

In this example our taxpayer is single, one job, no itemized deductions, and no dependents.

First things first, you want to make sure that you enter your name exactly the way that appears on your social security card. Otherwise you could end up making tax payments and not getting credit for them.

Equally as important make sure that you check the box for the correct tax filing status, which in this case is single. This tells your employer to not tax the first $12,400 (this is the standard deduction for single tax filers and changes for inflation each year) that you make from this job and at what percentage to withhold Federal taxes. Not checking the correct box will result in you owing because your taxes will be withheld at the wrong rate.

W-4 Step1: Enter Personal Information

The final part of filling out the W-4 for a single person with one job and no dependents is to go to step 5, sign, date and turn in to your employer.

Note: Steps 2-4 are only to be done if they apply to you. So if you don't meet any of the qualifications for 2-4 just skip them. The W-4 is designed to make sure that the right amount of tax is withheld during the year, not to get you a large refund. If you would like to increase the amount of your refund you can choose to have additional money withheld from your income on line 4(c).

If you're single but have multiple jobs you can check out How to Fill Out a W-4 When You're Married. Everything past step one will apply to you too!

How to Fill Out a W-4 When You're Married

"You get better tax benefits when you get married!"

Anyone else heard that? Well it's true, the standard deduction is doubled, which makes sense but now you're also able to earn more money and possibly be taxed at a lower rate. However, a lot of married couples don't take advantage of this benefit because they don't realize they should update their W-4 after a major life event like marriage.

Let me explain...

Couples fill out a new W-4 but they don't do it correctly. Both spouses check the box in Step 1 as married. However they completely ignore step 2 and grossly underpay their taxes and end up with a tax bill.

For example: If we have a couple and each spouse makes $60,000 at their job that's a total of $120,000 but if they don't fill out Step 2 properly the first $49,600 of their income won't have any taxes withheld. They'll also only have 12% withheld even though combined they are in the 22% tax bracket.

Note: If this has happened to you and you need help getting back on the good side of the IRS contact our firm today. We specialize in helping taxpayers get back in good graces with the IRS. If you owe $10,000 or more you can book a free tax relief consultation at

Step 2 ensures that both jobs are withholding the proper amount while still taking advantage of the married filing jointly benefits. There are 3 different ways to figure out the correct amount to be withheld for extra withholding in Step 4.

Step 2: Multiple Jobs or Spouse Works