The number of allowances you claim has a direct impact on your tax withholding. If you claim too many allowances on your W-4, you will be over-withheld. On the contrary, if you do not report enough allowances, you will be under-withheld and expected to pay the federal government more money when you file for taxes.
So, if you do need to change your withholding allowances, how should you go about it?
How Many Allowances Should I Claim on 2018 Form W-4?
When you started your job, your employer handed you a W-4 to fill out. This form reports the appropriate amount to withhold from your paycheck for federal taxes. Depending on your scenario, the proper amount of allowances to report can vary. Therefore, it’s best to update your W-4 when a life event occurs, such as marriage or divorce.
Read When Should You File a New W-4 to learn more!
Some companies choose to offer their employees online withholding forms, while others still use paper. No matter the method, the best way to change your withholding allowances is to submit another W-4 to your employer. It’s as simple as that.
Note, there are also state W-4s. If you think you should submit another state W-4, do so by following the same process.
Form W-4 may seem like another tedious tax document, but it can have strong financial repercussions. That’s why changing your allowances to reflect your scenario is always a good idea. Remember, you do not want to be under-withheld and end up owing the federal government more money when you file taxes.
Looking to fill out a federal W-4 online? Try our W-4 Calculator.