How to Calculate Tax Allowances

How to Calculate Tax Allowances
Calculating Tax Allowances

Step 1

Download a Form W-4. See Resources.

Step 2

Fill out the Personal Allowances Worksheet. Give yourself one point for yourself, your spouse and each qualifying dependent. Give yourself a point if you will have at least $1,900 in dependent care expenses. If you intend to claim the Child Care Tax credit, give yourself another point. Add up your points. This is your total number of allowances.

Step 3

Fill out the Deductions and Adjustments Worksheet, in addition to the Personal Allowances Worksheet, on page two of your W-4, if you intend to itemize your deductions. Refer to Worksheet 2 and 8 in IRS Publication 919 for an estimate of your itemized deductions. This is your total number of allowances.

Step 4

Fill out the Two-Earners/Multiple Jobs Worksheet, in addition to the Personal Allowances Worksheet, if you have more than one job or both you and your spouse work and your collective income will exceed $40,000. This is your total number of allowances.

Step 5

Recalculate your withholdings if you experience any personal or financial changes, such as divorce or change in income.