2021 Update: Good news! Nothing significant changed for workers (you!) with regards to filling out the 2021 W4.
If you’re filling out a W4 form, it likely means you have a new job or have gone through changes to your financial situation.
If the reason you’re filling it out is a new job or an addition to the family, congratulations! Don’t forget to also sign up for your job’s 401K retirement plan AND open an IRA.
Regardless of the reason why you need to fill out a 2021 W4 Form, you’ll be happy to know that the W4 has been refreshed and redesigned to make it easier than ever to fill out.
The days of wondering whether you should be claiming ‘0’ or ‘1’ are over! The W4 no longer asks about allowances.
This article will explain what the 2021 W4 is and how to fill out the 2021 W4 Form.
What Is The W4 Form And Why Was It Redesigned
The 2021 W4 Form needs to be filled out by all new employees and existing employees who want to update their withholding. The form makes sure your employer can withhold the correct amount of federal income tax from your pay.
If you are happy with your withholding and you already submitted a W4 to your employer during a previous year, you do NOT need to update the form. Only do so, if your tax situation has changed.
Having too little withheld means you’ll likely owe tax when you file your tax return and may owe a penalty. Have too much withheld and you will generally be due a refund.
The redesign eliminates allowances. This change aligns with the changes from the 2017 Tax Cuts and Jobs Act. The changes make the Form simpler to complete and easier for workers to accurately let their employer know how much tax to withhold.
Trust me, it’s a LOT easier now.
What Does the 2021 W4 Look Like & Where Can I Download It
The 2021 W4 Form consists of 4 pages, and you can download a 2021 W-4 Form Printable PDF copy here.
Page 1 consists of the actual Form itself. This is the only page that must be returned to your employer.
Page 2 includes instructions (see below).
Page 3 comprises the Multiple Jobs Worksheet and Deductions Worksheet.
Finally, Page 4 has a set of withholding tables to be used in conjunction with Page 3.
How To Fill Out A W4
Now that you have your W4 Form ready to be filled out, let’s go through each step so that you can get this over with and move on with more important things in your life, like watching reruns of Buffy The Vampire Slayer, or choosing a low-cost online financial advisor to help you save and invest your money like a pro.
The first thing that you need to know, is that the easiest way to fill out the form is to use the IRS’s withholding estimator. Their calculator works best on desktop (Mac or PC) so that you can export the completed form. I’ve had less success on mobile.
All you do is follow a sequence of steps and you can then download a pre-filled 2021 W4 Form. It’s that easy.
Now, let’s move on to the steps to filling out the form if you’d rather DIY.
Step 1: Enter your personal information.
This step is self-explanatory. The only thing that might be less straightforward is step 1c, which is where you need to select your filing status.
Your tax filing status refers to how you will file your taxes at the end of the 2021 tax year. So if you are single and don’t expect to get married this year, you’ll file taxes Single.
If you are confused about this, check your taxes from last year and see what your previous filing status was. Assuming no significant life changes occurred or are expected, you’ll likely file taxes the same way!
Step 2: Multiple Jobs or Spouse Works
The beautiful thing about steps 2 through 4 is that you ONLY need to fill them out IF they apply to you.
That means that if none of the steps apply to you, you can skip straight to Step 5 to sign and wrap things up.
Complete step 2 if you (1) hold more than one job at a time, or (2) are married filing jointly, and your spouse also works.
The easiest way to fill this step will be to use the IRS’s tax withholding estimator on a Mac or PC. Alternatively, if your household only holds two jobs in total, and both have similar pay, you can check the box for Step 2(c) and proceed to Step 3.
To use their estimator, you’ll need to make sure you have your and your spouse’s most recent pay statement and any info on other sources of income.
Once you’re done using the IRS’s estimator, you can head back here to see how to proceed.
Step 2(b): Use the Multiple Jobs Worksheet
If you prefer not to use the estimator tool or you can’t get it to work, you can use the multiple jobs worksheet. Follow the instructions on the Form and input the final result in Step 4(c) as an extra withholding.
Step 3: Claim Dependents
Like Step 1, Step 3 is also relatively simple. If your income will be $200,000 or less ($400,000 or less if married filing jointly), follow the steps listed in the Form.
As an example, let’s assume your household income will be $300,000, you will file married filing jointly, you have three kids under the age of 17, and you also support your elderly mother financially.
Under this example, your total for step 3 will be $6,500. This is because you have three qualifying children, so 3 x $2,000 = $6,000. You also have one other dependent, which gives you an additional $500. As a result, $6,000 + $500 = $6,500.
Simple enough.
Step 4: (Optional) Other Adjustments
Follow the directions for Step 4(a) if you have non-job income for which you’d like to have tax withheld.
Step 4(b)
Use the Deductions Worksheet on Page 3 if you are NOT expecting to claim the standard deduction. If you aren’t sure what this means, then you are likely going to claim the standard deduction (the vast majority of people claim the standard deduction). If you aren’t sure, you can use last year’s taxes as a guide or as your accountant.
Step 4(c) was already discussed above in Step 2(b) with regards to the Multiple Jobs Worksheet. Finally, let’s move to the final step!
Step 5: Sign Here
Step 5 is required to complete and submit your 2021 W4 Form, and you simply need to sign and date the Form.
It’s important to realize that you must complete the Form honestly and accurately since this Form is a legal tax document, and you can face penalties of perjury if you do not complete it honestly.
Don’t cheat, kids.
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*Disclaimer: The Finance Twins is a financial publisher that does not offer personal financial advice or tax advice.
Camilo is a personal finance expert and the Co-Founder and CEO of The Finance Twins. I was raised in poverty by a single mother and had to learn everything about personal finance on my own. I have been featured on Forbes, Business Insider, CNBC, and US News. Earlier in my career, I worked as an investment banking analyst on Wall Street at JPMorgan Chase & Co., and I have an M.B.A. from Harvard University and a B.S.E. in finance from the Wharton School of the University of Pennsylvania.