How to Fill Out a W-4 Form and Keep More Money for Your Paycheck

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When you start a new job, your first day is typically a whirlwind of introductions, training and paperwork. And if you’re not out of school yet, you might be even more overwhelmed, wondering about how to fill out a W-4 form as a student.

Whether you need to fill out a W-4 form if you’re a student is actually determined by factors like your amount of income, dependency status and age. The same holds if you’re a recent graduate or long off-campus.

Here’s what you need to know about the form, starting with how it affects your paycheck and taxes:

What a W-4 form does

If you’re in or just out of school, your paycheck can be a big shock. The amount you actually take home is less than the salary you earn thanks to taxes. That’s where the W-4 form comes into play.

When you start a new job, the IRS requires your employer to collect certain information from you, among other new job forms. The human resources department or your boss will ask you to complete the W-4 form.

The form tells your employer how much to withhold from your paycheck for federal income taxes. The information you enter impacts your paycheck total each pay period and how much you’ll owe at tax time in April.

If you underestimate your withholding, you’ll owe money when you file your taxes. Overestimate, and you can get a larger tax refund.

Although getting a big refund can sound great, it’s a good idea to try to calculate your withholding as precisely as possible so that you have more money each month to put toward paying off student loans or investing.

The IRS’ Tax Withholding Estimator can help you decide what’s right for your situation.

How to fill out a W-4 form if you’re a student

Being a student, even a full-time one, isn’t enough to make you exempt from federal income taxes. Your dependency status — whether you’re single or an independent college student or are claimed as a dependent on a parent’s tax return — is more critical.

In fact, if your income is below the filing requirement for your dependency status, you could be exempt, according to the IRS. You could employ the agency’s “Do I Need to File a Tax Return” tool to determine your requirements.

How to complete a W-4 in 3 steps

Although it can seem intimidating, here’s how to fill out a W-4 form if you’re a student or non-student, in three easy steps:

1. Choose exempt or not exempt
2. Fill out the worksheets
3. Complete your W-4

1. Choose exempt or not exempt

One of the first things the W-4 form prompts you to answer is whether you’re exempt, which means your employer won’t withhold federal income taxes from your paycheck.

For your taxes and the W-4 form, you’re exempt only if the following are both true:

  • In 2019, you had a right to a refund of all federal income taxes withheld because you had no tax liability.
  • In 2020, you expect a full refund of all federal income taxes withheld because you have no tax liability.

If you’re working full-time, you likely won’t qualify for tax-exempt status. As of Jan. 13, 2020, you must make less than $12,200 a year to qualify if you’re single.

Make sure you only claim exempt status if you meet all the criteria. If you claim it when you’re not really exempt, you’ll owe a significant amount when you file your taxes, along with penalties.

2. Fill out the worksheets

When filling out the W-4, you need to declare your personal details, including whether you’re single or married, if you’ll claim a dependent on your taxes and if you’ll file as head of household. (“Personal allowances” seen in previous iterations of the form were discarded for 2020.)

With these basics out of the way, you can complete two worksheets, if applicable, to determine other adjustments:

Two-earners/multiple jobs worksheet

If you have more than one job or are married and your spouse also works, you’ll need to complete the two-earners/multiple jobs worksheet. This sheet helps you calculate the extra amount you need to withhold from your paycheck with the additional income.

IRS

Deductions and adjustments worksheet

You only need to complete this worksheet if you’ll itemize your deductions, such as if you plan on deducting mortgage interest, charitable contributions or medical expenses. You can also account for deductions relating to student loan interest and IRA contributions, among other categories.

IRS

3. Complete your W-4

Once you have finished filling out the worksheets, you can complete the actual W-4 form.

IRS

The first few lines ask for basic information, such as your name, address and Social Security number. On line 4(b), you enter the number you calculated from the deductions and adjustments worksheet.

If you filled out the two-earners/multiple jobs worksheet, you need to enter the final number from that worksheet on line 4(c) of the W-4.

For those who worry about withholding too little from their paycheck, you can also opt to withhold additional money from your pay. Just enter the extra amount you want to withhold on line 4(c).

If you’re tax-exempt, you have to write in “exempt” on line 4(c).

Finally, you need to verify that the information is correct and sign and date the form. Once it’s done, you can submit it to your employer.

IRS

Why you should revisit your W-4

Completing your W-4 is an important step when starting a new job as a student or graduate. But it’s wise to review and update your W-4 periodically.

If you get married or divorced, buy a home, change careers, pick up a side hustle or have a child, make sure you complete a new W-4 form and submit it to your employer.

Updating your form ensures the right amount is withheld and can even help put more money in your bank account.

Andrew Pentis contributed to this report.

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