With the new year comes a new Form W4. The form has not changed much, if at all since it had a
complete overhaul in 2020. In 2020, because of the Tax Cuts and Jobs Act (TCJA), Form W4 was
revamped to provide taxpayers with a more accurate method of determining their tax liability. The form
is more complicated than in prior years and there is no longer the option of choosing “exemptions”.
This is because the TCJA eliminated the personal exemption starting in tax year 2018. Below is a step-
by-step guide to filling out your Form W4.

Step 1: Personal Information
Simple enough. The only question you might run into in this section is whether or not you qualify to file
as Head of Household. Since qualifying for Head of Household can save you big money on the taxes you
owe, check out this link if you have any questions or doubts:
https://www.irs.gov/publications/p501#en_US_2019_publink1000220775

Step 2: Multiple Jobs or Spouse Works
Step 2 is only required to be completed by individuals who have more than one job, or who file jointly
with a spouse that has a job.

Single with 1 W-2 job: Skip this step.

Married Filing Joint, 1 W-2 job, and spouse does NOT work: Skip this step

Married Filing Joint and spouse works: There is no easy solution. You have to choose one of the three
options, a, b, or c:

  • Option a: You go to the IRS website and go through a long series of questions. This is the most
    thorough option in regards to determining your tax liability and withholdings, but do not expect
    to be able to complete this option during your first day on a new job. If you choose this option
    you’ll most likely need to do it at home with your spouse present and with paystubs at hand.
  • Option b: You use the Multiple Job Worksheet on Page 3 of Form W-4.
    • If you have two jobs, or if you and your spouse each have one job, using this option is
      simple enough. You’ll need to know how much each of you makes in a year. You’ll use
      the table on Page 4 of Form W-4. The vertical column is for the higher paying of the two
      jobs. The horizontal rows represent the lower-paying job. Find the amount at the
      intersection and enter it in Box 1 of the Multiple Job Worksheet and skip to the
      worksheet’s Step 3.
    • In Step 3 you enter the number of pay periods for the highest paying job.
      •  Weekly = 52
      •  Bi-weekly = 26
      • Twice per month = 24
      •  Monthly = 12
    •  In Step 4 you divide the amount in Box 1 by the amount in Box 3 and enter the
      result in Step 4c of Form W4 (on the front page of the form).

      • If you and your spouse have three or more jobs you follow the same procedure for
        persons with 2 jobs except that:
      • 2a: Use the table on Page 4 of Form W-4. The vertical column is for the highest
        paying of all the jobs the two of you have. The horizontal rows represent the
        second highest paying job that you had your spouse have. Find the amount at
        the intersection and enter it in Box 2a.
      • 2b: Add the amounts of the highest and second-highest paying jobs and use the
        total for the vertical column for the table on page 4. Add the wages from the 3 rd
        highest and any additional lower-paying jobs and use the sum for the horizontal
        rows. Enter the amount at the intersection in box 2b.

        • Enter the total from 2a and 2b in box 2c and use this total to divide by the
          number of pay periods and enter the result in Step 4c of the W-4.
  • Option c: It is tempting to cop out and use this option, but we can only recommend it if you and
    your spouse make nearly equal income from your jobs. Otherwise, option a or b are both better
    predictors of your tax liability.

Step 3: Claim Dependents

  • Only complete Step 3 for your highest paying job. Your spouse does not qualify as a dependent for the
    $500 credit, even if they are unemployed.

Step 4: Other Adjustments

    • Step 4 is intended for individuals who have sources of income that are not subject to withholdings, such
      as dividends and interest. It is optional and beyond the scope of these instructions.
  •  Exemption from Withholding
    • You may claim exemption from withholding for 2021 if you meet both of the following conditions:
      1. You had no federal income tax liability in 2020 and you expect to have no federal income tax
        liability in 2021.
      2. You had no federal income tax liability in 2020 if (1) your total tax on line 24 on your 2020 Form
        1040 or 1040-SR is zero (or less than the sum of lines 27, 28, 29, and 30), or (2) you were not
        required to file a return because your income was below the filing threshold for your correct
        filing status.

If you claim exemption, you will have no income tax withheld from your paycheck and may owe taxes
and penalties when you file your 2021 tax return. To claim exemption from withholding, certify that you
meet both conditions above by writing “Exempt” on Form W-4 in the space below Step 4(c).
Then, complete Steps 1(a), 1(b), and 5. Do not complete any other steps. You will need to submit a new
Form W-4 by February 15, 2022.