If you're being claimed as a dependent by someone else, working more than 1 job or receiving unearned income, the number of allowances you may claim when filing your Form W-4 will be affected. Generally, if you're single, work 1 job, and no one can claim you as a dependent, you can claim Single with 1 allowance. The status (Single or Married) is indicated on line 3 of Form W-4. The number of allowances you claim is entered on line 5. The number of allowances you claim on Form W-4 may differ from the number of exemptions you claim when you file your tax return.
Am I Exempt from Withholding?
You can claim exemption from withholding if you didn't have a federal income tax liability last year and don't expect to have one this year. You can't claim exemption from withholding if both of the following apply to you:
- You can be claimed as a dependent by another person.
- Your total income is expected to be more than $950 and is expected to include more than $300 of unearned income (for example, interest and dividends).
Note: Being a student doesn't automatically qualify you to be exempt from withholding. You still must meet the other requirements. If you meet the requirements to file exempt, complete only lines 1–4 and write the word "exempt" on line 7 of Form W-4 and file it with your employer.
Someone Claims You as a Dependent
Your parents or someone else can claim you as a dependent if you didn't provide more than half your support for the year. If someone else will claim you as a dependent, then you're not entitled to claim an allowance on line A of the personal allowances worksheet on Form W-4.
Withholding When Working More Than One Job
If you're working more than 1 part-time job or a full-time job and a part-time job, you may need to compensate for the extra job by altering your withholding. Tax is withheld from your income from any job based only on the income from that job. The income from the part-time job is commonly low enough that the amount withheld will not be enough to cover the tax on that income. If this is the case, be sure to increase your withholding at your primary job to compensate.
If you have more than 1 job or you're married and both you and your spouse are working, complete the Two Earner/Multiple Jobs Worksheet on page 2 of Form W-4 to compute the additional amount you need to withhold. This can help you avoid a balance due at tax time.
Income Other Than Wages
Perhaps you receive a taxable scholarship or income from investments your grandmother gave you, you won a prize, or you're doing some self-employment work on the side. Income from these items will increase your tax, so you should factor that in when completing your W-4. For example: You determine that claiming 1 allowance will cover the money you earn from your wages, but some extra income is going to add $200 to your tax liability. The simplest way to compensate for that extra income is have an additional amount withheld from each paycheck. You get paid every other week, and $200 over 26 weeks makes an additional $8 each pay period. Enter $8 on line 6 to cover the tax on that extra income.
The worksheets provided with Form W-4 are designed to help you compute the exact amount of withholding you require. Be sure to use them to verify you are on the right track with your withholding. Check with a tax professional for help with your W-4 if you have questions.
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