Few things affect your financial life the way your Form W-4 can. This seemingly innocent form dictates how much of your paycheck you can take home and use to pay your bills, and how much of your earnings your employer will send to the IRS. The beauty of the W-4 is that you can pretty much claim whatever you want to on it, whether you're married or not – within reason. But it will catch up with you one way or another on Tax Day if your calculations are incorrect.
To further complicate matters, the IRS has issued a new Form W-4 for 2020. The agency says that it's intended to "increase transparency, simplicity and accuracy," but the end result is that claiming "zero allowances" is no longer possible because the new form eliminates allowances. You can achieve the same effect in other ways, however.
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The Effect of Married Claiming “0”
Claiming zero allowances or taking certain steps on the 2020 Form W-4 will decrease your take-home pay regardless of whether you file as married or single. More of what you earn will be sent to the IRS. You'll get it back in the form of a refund if it turns out that you don't owe that much when you complete your tax return. You've effectively used the IRS as a savings account all year. The problem with this approach is that the IRS doesn't pay interest.
The IRS suggests that you might want to have more withheld if you're married and both you and your spouse have jobs. It might also be a good idea if one or both of you have other sources of income from which taxes aren't withheld, or if you owed the IRS on Tax Day last year because you didn't have enough withheld.
About the 2020 W-4
The Form W-4 change was prompted by the passage of the Tax Cuts and Jobs Act that went into effect in January 2018. The new law eliminated personal exemptions from the tax code, and that's basically what the old allowances were. They correlated with each exemption you would claim at tax time.
You had to tackle worksheets on the old W-4 to help you nail down your proper number of allowances, but the 2020 form just asks you some questions and it arrives at your withholding based on your answers.
Completing Form W-4: Claiming Single
You can increase your withholding in a couple of ways on the 2020 Form W-4, arriving at pretty much the same result as claiming zero allowances on the previous form.
Steps 1 and 5 of the W-4 are required. The first is for your identifying information, including your name, address, Social Security number and filing status. Step 5 is where you sign. A married individual can achieve an effect close to claiming zero allowances by checking the box marked "Single or Married filing separately" in Step 1 rather than the "Married filing jointly" box. Your employer will then withhold based on the single standard deduction, which is half the married filing jointly deduction in 2020: $12,400 rather than $24,800.
And yes, it's perfectly OK to do this. You're not giving the IRS less from your paychecks than you otherwise would have. You're giving them more than you have to, and they have no problem with that.
Completing Steps 2, 3 and 4
You can also make adjustments to your withholding in Steps 2, 3 and 4. Step 2 walks you through some calculations to help you figure out exactly how much you want to be withheld if both you and your spouse work and one of you earns more than the other. You can complete this part if you want to, but you don't have to. It should tell you and your employer the correct and safest amount of withholding in this circumstance so you don't underpay.
Step 3 calculates how much in the way of child or dependent tax credits you're eligible to claim. Both these credits reduce your tax liability, so indicating that you're going to claim them would result in having less tax withheld from your pay. More tax will be withheld if you leave it blank because your employer will base withholding on the presumption of a higher tax bill. Again, you can complete it if you want to, but it's not required.
Finally, you can simply enter a number in Step 4 at line (c) to tell your employer to withhold an extra $10, $20 or $50 – the exact amount is up to you – from each paycheck and send it to the IRS.
Ask the IRS for Help
The IRS offers a Tax Withholding Estimator on its website if you want to roll up your shirtsleeves, input data and get your withholding just right rather than take a shot in the dark. In fact, the IRS "encourages" you to do so, even providing the link on the Form W-4.
You might also consider touching base with a tax professional to discuss why you want more withheld from your pay, to explain your goals and to get advice as to how to achieve them.
- IRS: FAQs on the 2020 Form W-4
- H&R Block: Tax Information Center – IRS – Forms
- TurboTax: Top 5 Reasons to Adjust Your W-4 Withholding
- H&R Block: W-4 Tax Withholding Allowances
- IRS: Form W-4 Employee’s Withholding Certificate
- IRS: Publication 15-T (2020), Federal Income Tax Withholding Methods
- IRS: IRS Provides Tax Inflation Adjustments for Tax Year 2020
- IRS: Tax Withholding Estimator