IRS Form W-4 is more than just a form your employer requires you to fill out when you start a new job. It also determines how much in federal taxes you will have withheld from every paycheck. After filling out a W-4 at the beginning of a new job, many taxpayers don't give this form a second thought. However, you can make changes to your W-4 whenever situations in your life change that could affect your tax filing status, the number of dependents you have or your marital status. Tax legislation was passed in 2017 that could impact your future taxes, so it couldn't hurt to review your W-4 to ensure you're having the appropriate amount of taxes withheld. But for 2017 taxes that you file in 2018, many of the new tax rules do not affect your filing.
When you claim zero allowances on your W-4, this means that you will have the maximum in federal taxes withheld from every paycheck. You'll take home less money per pay period than you would if you claim more allowances. The IRS allows you to claim one allowance for yourself, one for your spouse and one for each qualifying dependent. You can also claim allowances if you plan to itemize or take certain tax credits, such as the child and dependent care credit and the child tax credit.
Claiming zero on Form W-4 also increases your chances of receiving a larger tax refund than if you had claimed the maximum number of allowances. Many taxpayers opt to claim zero allowances in hopes of receiving a refund at the end of the year. But doing this gives the IRS interest-free use of your money until you get your refund. For this reason, it isn't for everyone. However, you may want the larger refund at tax time to invest, pay off bills, take a family vacation or otherwise spend as you see fit.
Filling Out Form W-4
To make changes to your W-4, request a new form from your employer or visit the IRS website for a copy. You will notice a personal allowances worksheet attached to the form. This worksheet guides you through determining the number of allowances your entitled to claim. Work through lines A to G to find out how many allowances you can claim, then total these up on line H. The result on line H is the total number of allowances you can claim. But just because you're eligible for a certain number of allowances does not mean you must claim them all. If you want to have zero allowances on Form W-4, simply put "0" on lines A to G, as well as on line H, then follow the instructions on the worksheet to complete the form.
If you're unsure as to how many allowances you are eligible to claim or what the tax implications are of claiming zero, visit the IRS website for publications, interactive tax assistant tools and a withholding calculator. These will help you to decide if claiming zero on Form W-4 is the best choice.
- IRS: 2018 Form W-4
- IRS: Topic Number 753 - Form W-4 – Employee's Withholding Allowance Certificate
- IRS: IRS Withholding Calculator
- SmartAsset: A Guide to Filling out Your W-4 Form
- SmartAsset: How Many Allowances Should You Claim?
- IRS: Updated 2018 Withholding Tables Now Available; Taxpayers Could See Paycheck Changes by February