The purpose of this section is to explain how to adjust your
If you are having too little or too much tax withheld, you should
either increase or decrease your withholding.
How Do I Adjust My Withholding?
You increase or decrease your withholding by filling out a new Form
W-4 and giving it to your employer. You can use the worksheets
and information in this publication to help you complete Form
W-4. You can complete the Form W-4 near the end of this
publication and give it to your employer.
How Do I Increase My Withholding?
There are two ways to increase your withholding. You can:
- Decrease the number of allowances you claim on line 5 of
Form W-4, or
- Enter an additional amount on line 6 of Form W-4 that
you want withheld from each paycheck.
How to request an additional amount to be withheld.
You can request that an additional amount be withheld from each
paycheck by following these steps.
- Complete Worksheets 1 and 2.
- Complete a new Form W-4 if the amount on line 5 of
Worksheet 2 is more than you want to have to pay or would
cause a penalty when you file your tax return for 2001.
- Enter on line 5 of the new Form W-4 the same
number of withholding allowances your employer now uses for your
withholding. This is the number of allowances you entered on the last
Form W-4 you gave your employer.
- Enter on line 6 of the new Form W-4 the amount from
line 6 of Worksheet 2.
- Give your newly completed Form W-4 to your
If you have this additional amount withheld from your pay each
payday, you should avoid owing a large amount at the end of the year.
Using Worksheets 1 and 2, Steve figures that
his 2001 tax liability will be $5,000 and that his withholding for the
year will be $4,700. Steve's tax will be underwithheld by $300 ($5,000
- $4,700). He will have to pay this amount when he files his
2001 tax return or he can increase his withholding. Steve gets a new
Form W-4 from his employer, who tells him that there are 50
paydays remaining in 2001. Steve completes the form as before, and
enters the same number of withholding allowances as before, then
enters $6 ($300 x 50) on line 6 of the form. This is the
additional amount to be withheld from his pay each payday. He gives
the completed form to his employer.
What if I have more than one job or my spouse and I are a
You are likely to need to increase your withholding if you have
more than one job (or if you are married filing jointly and your
spouse also works). If this is the case, you can increase your
withholding for one or more of the jobs.
You can apply the amount on line 5 of Worksheet 2 to
only one job or divide it between the jobs any way you wish. For each
job, determine the extra amount that you want to apply to that job and
divide that amount by the number of paydays remaining in 2001 for that
job. This will give you the additional amount to enter on line 6 of
the Form W-4 you will file for that job. You need to file a Form
W-4 for each job for which you are changing your withholding.
Meg Green works in a store. Her husband, John, works full time in
manufacturing. They file a joint income tax return. When they fill out
Worksheets 1 and 2, they find they will not have enough tax
withheld. They can divide the amount on line 6 of Worksheet 2
any way they want. They can enter an additional amount on either of
their Forms W-4, or divide it between them. They decide to have
all of the additional amount from line 6 withheld from John's wages,
so they enter on line 6 of his W-4 the number from line 6 of
their completed Worksheet 2. Both claim the same number of
allowances as before.
How Do I Decrease My Withholding?
Once you determine that you expect to have more tax withheld than
your projected tax liability for 2001, you may be able to decrease
your withholding by increasing the number of allowances that you claim
on Form W-4.
You can only claim the number of allowances to which you are
entitled. To see if you can decrease your withholding by increasing
your allowances, see the Form W-4 instructions and the rest of
How do I increase the number of allowances I can claim?
You figure the number of withholding allowances you are entitled
to claim as follows.
- Complete Worksheets 1 and 2.
- If your projected withholding is significantly more than
your projected tax, get a new Form W-4 (or use the one in the
back of this publication).
- Complete the Personal Allowances Worksheet on
- Use the remainder of the worksheets in this publication, as
- Complete the Deductions and Adjustments Worksheet
on Form W-4 if you plan to itemize deductions, claim
adjustments to income, or claim tax credits from Worksheet 7
on your 2001 return.
- Complete the Two-earner/two-job worksheet on Form
W-4 if you meet the criteria on line H of the Form W-4
Personal Allowances Worksheet.
- Fill out Form W-4 itself.
- Enter the number of allowances you are entitled to claim on
line 5 of Form W-4.
- If the number of allowances you are entitled to claim is
different from the number you are already claiming, give the newly
completed Form W-4 to your employer.
What if I can claim tax credits?
Figure 2 shows tax credits you may be able to use to
reduce your withholding. The Form W-4 Personal Allowances
Worksheet only provides rough adjustments for the child and
dependent care credit (line F) and the child tax credit (line G). Use
Worksheet 7 to take these credits into account more
accurately and also take other credits into account.
If you take the child and dependent care credit into account on
Worksheet 7, enter -0- on line F of the Personal
Allowances Worksheet. If you take the child tax credit into
account on Worksheet 7, enter -0- on line G of the
Personal Allowances Worksheet.
To figure the additional amount to add on line 5 of the Form
W-4 Deductions and Adjustments Worksheet for your tax
credits, complete Worksheet 7. Then complete the Form
W-4 Deductions and Adjustments Worksheet and the rest
of Form W-4.
Brett and Alyssa are married and expect to file a joint return for
2000. Their combined estimated wages are $65,000. Their projected tax
credits include a child and dependent care credit of $960 and a
mortgage interest credit of $1,700.
They use Worksheet 7 to see whether they can convert
their tax credits into additional allowances.
- They enter their expected child and dependent care credit,
$960, on line 1 of Worksheet 7.
- They enter their expected mortgage interest credit, $1,700,
on line 7 of Worksheet 7.
- They add these credits and enter the total, $2,660, on line
- Because they are married filing a joint return, they use the
table for married filing jointly.
- They see that their combined estimated wages, $65,000, falls
between $62,001 and $126,000, and that the number to the right of this
range is 3.6.
- They enter 3.6 on line 10.
- They multiply line 9 by line 10 and enter the result,
$9,576, on line 11.
- They take the result on line 11, and add it to their other
adjustments on line 5 of the Deductions and Adjustments
Worksheet on Form W-4.
- They finish filling out the Deductions and Adjustments
- Because they chose to account for their child and dependent
care credit this way, they enter -0- on line F of the Personal
When Will My New
Form W-4 Go Into Effect?
If the change is for the current year, your employer must put your
new Form W-4 into effect no later than the start of the first
payroll period ending on or after the 30th day after the day on which
you give your employer your revised Form W-4.
If the change is for next year, your new Form W-4 will not
take effect until next year.
Worksheets 1 and 2 -- Projected Tax for 2001 and Projected Withholding for 2001
Worksheets 1a and 1b Tax Rate Schedules for S and HoH
Worksheets 1c and 1d Tax Rate Schedules for MFJ and MFS
Worksheets 3 and 4 -- Itemized Deductions and Exemptions Phaseout
Worksheet 5 --Figuring Tax If You Expect to Have Capital Gain
Standard Deduction Tables for 2001
Converting Credits To Withholding Allowances
Blank Form W-4 page 1
blank Form W-4 page 2
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