fill out a w-4

You probably know there is a new tax law by now, right? Well, there is. The first thing thing that you should probably know is that there is a new W-4 now too.  What exactly is a W-4, you might ask? I’ll get to that soon.  I will also tell you what you should do to fill out a W-4 the right way, and what it will mean for you and your money. Ultimately, we want you to maximize your paycheck so nothing gets between you and your goals.

In late December of 2017, congress passed the “Tax Cuts and Jobs Act”. Among many other changes, the new tax law increased the standard deduction, got rid of personal exemptions, doubled the child tax credit, and so on. What you should take away from this is that there is a decent chance that you will have to pay less taxes come April of 2019.

With new tax laws, inevitably comes new tax forms. In late February, the IRS released the 2018 W-4 to reflect the changes.

What is a W-4, Anyway?

A W-4 is the form that tells an employer how much to withhold in taxes from their pay check. This is something we can’t get around. As a matter of fact, if you don’t fill it out a W-4, your boss will be forced to withhold the maximum amount. This will ultimately lower your paycheck WAY beyond what it should to be.

You fill out a W-4 when you start a new job. While it’s not a requirement, it’s smart to review the form each year as well. I’ll tell you why and what to look for shortly. Forbes tells us that it’s a good idea to update your form when you have a major financial change as well. Examples would be getting married, receiving a promotion or having children.

Filling Out a W-4 Cause & Effect

When you fill out a W-4, you’re ultimately trying to “guess” how much you will owe in taxes come April of next year. The goal is not to get a bigger refund. The goal is to have a refund of $0.

On line 5 of your W-4, you claim your “allowances”. The more allowances you claim, the higher your paycheck will be. That means, your employer will withhold less from your paycheck. The less allowances you claim, the lower your paycheck. I’ll tell you how to choose the right amount of allowances shortly.

More Allowances = More Paycheck

This is where the balancing act comes in. When you fill out your W-4 with too few allowances, you will likely get a tax refund. A tax refund is like saying, “Here IRS, take some of my money each paycheck. Give it back to me by April of next year, but don’t worry about paying me interest.”

While it feels good to get a refund, a bigger paycheck and a bigger savings account feels even better.

What You Should Doallowances on my w-4


First, before you choose your allowances, take advantage of the Personal Allowances Worksheet. This is on page 3 of your W-4. You will add 1 allowance for yourself, 1 if you are married filing jointly and so on.

There are additional worksheets as you keep going for those with multiple jobs or if you itemize your deductions (which means you keep track of your expenses throughout the year to help lower your taxable income).

Additionally, Kiplinger suggests that if you’re married, and both of you work, fill out your W-4’s together. First, decide the total by working through the worksheets. Then, each of you will claim 1/2 of the total allowances on your respective W-4. If you both claim the full amount, you will very likely end up owing taxes come next April.

Also, think about last year. If you received a big refund, then think about increasing your allowances. This will put more money in your paycheck each pay period. If you owed money last year, you can lower your allowances, spreading the tax bill over the entire year by letting your employer withhold more.

“Paycheck Checkup”

paycheck checkup

Another resource the IRS provides is the Withholding Calculator. Fair warning, this can be complicated if you’re not familiar with some of the details on your tax return. They recommend the following groups of people should do a “Paycheck Checkup”:

  • Two-income families.
  • People with two or more jobs at the same time or who only work for part of the year.
  • People with children who claim credits such as the Child Tax Credit.
  • People who itemized deductions in 2017.
  • People with high incomes and more complex tax returns.

The IRS asks that you prepare by gathering your most recent pay-stubs and income tax return.


At the end of the day, the goal is to maximize your paycheck without causing a huge tax bill at the end of the year. You fill out a W-4 to let the IRS know about your situation ahead of time. By getting it right, you are paying your share of taxes, spread over the entire year without even trying.

If you are getting back too much at tax time, then you are withholding too much. Raise your allowances to raise your paycheck (withhold less each paycheck) and lower your allowances to lower your paycheck (withhold more each paycheck).

Brad Ruttenberg

Brad Ruttenberg


Sports Fan, Movie Buff, and Anything Outdoors sums it up.  Brad loves spending time with his wife, Ashley, and their two boys.  He helps empower people to take control of their money, bringing them the confidence to build the life of their dreams.

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They are identical twins and money experts.  Matt and Brad Ruttenberg have, combined, over 2 decades of experience as financial planners.  They are known for simplifying money and helping others go from living paycheck to paycheck to thriving financially.

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