Each year, the Internal Revenue Service issues a new W-4, and each year, many people don’t bother to fill it out.
This happens despite the fact that there are significant things that can occur in any given year that might influence how you fill out a W-4. We’d argue that reviewing Form W-4 annually is an excellent habit for just about anyone, even if it’s not a federal requirement.
In this post, we’ll provide a quick overview of the 2023 W-4 for both employers and employees. We’ll show you exactly how to fill out the 2023 W-4, and we’ll walk you through the worksheets and the IRS withholding estimator. All of this knowledge can help anyone complete the form with the best information possible based on their situation.
Why should anyone care about filling out a W-4?
Taxpayers who fill out the 2023 W-4 form are less likely to wind up with a large tax bill or a giant refund when they file tax returns in 2024—money that could have been invested or spent on essential expenses throughout the year.
Updating your withholding amount is always optional, although the IRS recommends that employees revisit their W-4 forms every year.
Okay, let’s dive into the details, so you can know how to fill out the form.
An employer’s guide to the 2023 W-4
This section explains the biggest W-4 changes employers need to know about.
What do you need to know about Form W-4?
Employees who have not had significant life changes like getting married or having kids have probably not filled out a W-4 in a LONG time. That’s why we recommend that you remind your team about the importance of reviewing their withholdings every year. In addition, any new employees must fill out a W-4.
If that isn’t reason enough to revisit Form W-4, the passage of the Tax Cuts & Jobs Act (TCJA) in 2017, brought major changes to employee withholding. Those changes affected many taxpayers in many ways.
In case you missed some of the changes from the past few years, here are a few of the differences that are still in effect.
1. The Name
Historically, Form W-4’s title was “Employee’s Withholding Allowance Certificate.” Starting in 2020, Form W-4 no longer calculated “allowances,” so the title has been shortened to “Employee’s Withholding Certificate.”
2. Buh-Bye, Personal Allowances Worksheet
That’s right, the Personal Allowance Worksheet from page three of the old Form W-4 disappeared in 2020—and it remains gone.
Why? The TCJA eliminated personal exemptions. These exemptions allowed for deductions against a taxpayer’s personal income, which reduced their taxable income, and therefore, their federal income tax. These exemptions were tied to allowances, but since exemptions are now gone, the need to determine the number of allowances is gone too.
The five steps in the 2023 W-4
Now, let’s dig into each step so you can successfully guide your employees through the W-4 form.
Step 1: Enter Personal Information
This step must be completed by all employees. If an employee does not fill out the form, you are required to calculate their withholding as “Single” so you can withhold their taxes at the higher “Single” rate.
Step 2: Multiple Jobs or Spouse Works
The message before step two gives instructions on where to find guidance for any employees who may be exempt from withholding:
If your employee does not know if they are exempt, direct them to that language on Page 2 under the subhead Exemption from withholding.
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Here’s what Step 2 looks like:
First, you’ll notice that Step 2 instructs the taxpayer to only fill out this step if one of the following two bullets true:
- the person filling out the W-4 form has more than one job at the same time, or
- the person filling out the form is a) married, b) filing jointly, and c) works and has a spouse who also works.
If neither of those scenarios applies to your employee, they may skip this step.
If one of the above scenarios does apply to your employee, they should complete Step 2 by doing one (not all!) of the following:
a) using the IRS Tax Withholding Estimator; you’ll notice that this part of the form says “Reserved for future use.” This is becuase the IRS Tax Withholding Estimator has not yet been updated for 2023. Typically, this tool makes it easy for the tax payer to calculate withholdings, but you should wait until it is updated before using.
b) going to Page 3 of the form to manually calculate withholding and entering the result in Step 4(c) of the form.
c) checking the box; if the taxpayer only has two jobs, or if the taxpayer and spouse (who is filing jointly) have two jobs in total, then this box may may be checked.
Step 2 also includes a description This message also instructs any employees who do not need to fill out steps two through four to step five, which everyone must complete.
The IRS has stated that option (a) will give employees the most accuracy and privacy of the three since the Tax Withholding Estimator will compute all the relevant entries for the form–but of course the Withholding Estimator must be updated for 2023 in order to be accurate. Option (b) also provides accuracy but requires manual work, and (c) is the least accurate since it assumes the jobs have similar pay, but it’s the easiest to complete.
Step 3: Claim Dependents
Single taxpayers with a total income of $200,000 or less ($400,000 if married filing jointly) are eligible for the child tax credit. Employees should pay attention to the definitions in IRS Publication 972 – Child Tax Credit if they’re looking to claim the credit.
Step 4: Other Adjustments
This optional section is for various things that an employee may want to account for when considering their withholding. These areas include:
- (a): Other income (not from jobs). Additional income that might not be subject to withholding, like retirement income or dividends.
- (b): Deductions. This line is for deductions other than the standard deduction. This includes all itemized deductions like mortgage interest and charitable contributions minus the standard deduction. Remember that, in general, the standard deduction reduces a taxpayer’s adjusted gross income to arrive at taxable income. The greater of the standard deduction or itemized deductions will help reduce the amount of tax due. The 2023 standard deduction is $27,700 for married taxpayers filing jointly; $13,850 for single and married filing separately taxpayers; $20,800 for those filing as head of household.
- (c): Extra withholding. Any extra withholding that the employee would like to withhold each pay period.
Step 5: Make sure your employee has signed the form
If your employee doesn’t complete this final step, the form is invalid.
Guiding employees on how to fill out the 2023 W-4
All employees need to complete steps 1 and 5 in the new W-4. Steps 2, 3, and 4 are only completed if certain criteria apply. We’ll cover each of these steps in detail here.
Have your employees follow the steps below.
Step 1: Enter Personal Information
You will need to fill out your basic information: 1) Name; 2) Social Security number; 3) Address; 4) City/town, state, and ZIP; 5) Filing status. Nothing too complicated.
Here’s what it looks like:
Below the personal information fields in Step 1, there are Steps 2 through 4. Most likely, these steps won’t apply to you if you’re single with only one job or you’re married and your spouse doesn’t work.
Step 2: Multiple Jobs or Spouse Works
This step only applies to:
- those individuals who have more than one job at the same time
- those for whom all three of these things are true; they are a) married, b) filling jointly, and c) both spouses work
If you fill out this step, you should only do one of the following:
a) You’ll notice this section says “Reserved for future use.” This means that the IRS has not yet updated this section. However, this will likely point the taxpayer to the online IRS Tax Withholding Estimator, which has not yet been updated for 2023. Once it is updated, this is a fantastic tool to use to make your calculations.
updated before using.
b) Going to Page 3 of the form to manually calculate withholding and enter the result in Step 4(c) of the form.
c) Check this box if the descriton applies to you. Keep in mind that checking box 2(c) tells your employer that you have multiple jobs. If you don’t want to disclose that fact, don’t check the box.
In this step, the form notes that individuals with multiple jobs should complete Form W-4 with the information from their highest-paying job. That should result in the most accurate withholding.
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If you work more than one job, steps 3 through 4b should only be completed on one W-4 form.
Step 3: Claim Dependents
This section determines your eligibility for the child tax credit. It’s a relatively simple step to complete:
Single taxpayers with a total income of $200,000 or less ($400,000 if married filing jointly) will be eligible for the child tax credit.
Your number of qualifying children under age 17 multiplied by $2,000 will go into the first box. The number of other dependents multiplied by $500 will go in the second box. The sum of those two numbers will go on line 3.
Step 4: Other Adjustments
This section is for various things you may want to account for.
Here’s what it looks like:
These areas include:
- (a): Other income (not from jobs). Additional income that might not be subject to withholding, like dividends or retirement income.
- (b): Deductions. Itemized deductions like mortgage interest and charitable contributions that will exceed your standard deduction.
- (c): Extra withholding. Any extra withholding that you would like to withhold each pay period.
Step 5: Sign the form
Easy enough, right? Okay.
Keep in mind that if you don’t sign the form, it’s invalid. That means your employer will disregard your new W-4 selections and withholding, and instead calculate your withholding as “Single.”
Worksheets on Form W-4
Moving on. Just as it has been over the past few years, the 2023 Form W-4 has only two worksheets. We’ll cover both here so you can understand if you should use them, and why.
Multiple Jobs Worksheet
If you choose option b in Step 2, you will need to complete the Multiple Jobs worksheet. According to the IRS, this worksheet is less accurate than the tax estimator, but it provides the maximum amount of privacy.
Line 1 is for anyone who has two jobs or is filing jointly with a spouse who also works.
Using the tables on page four, find the wages or salary for the “Higher Paying Job” in the column on the left (see below) and cross reference it with the amount of wages or salary from the “Lower Paying Job” in the columns moving left to right.
At the intersection of these two amounts is the figure you will enter on line 1.
Note that the screengrab above is the table for taxpayers who are married filing jointly or qualifying surviving spouse . There is a separate table for single and married filing separately taxpayers and yet another separate table for taxpayers filing as head of household. Be sure you’re using the right table.
Line 2 is for someone who has three total jobs on their own or with a spouse.
Line 2a is for the two highest-paying jobs. Again, find the wages or salary for the highest-paying job in the column on the left and the wages or salary for the second-highest across the top. The figure at the intersection of those two figures will go on line 2a.
For line 2b, the wages and salaries for the two highest-paying jobs need to be added together and found in the column on the left. The wages and salaries for the third job will be found in the row across the top of the table. The value at the intersection of those two figures will go on line 2b. The sum of lines 2a and 2b goes on line 2c.
Lines 3 and 4 apply to everyone who chooses to fill out the Multiple Jobs worksheet.
Line 3 is the number of pay periods per year for the highest-paying job. For example, if that job pays weekly, then 52 goes on line 3. If the jobs pays bi-monthly, then 24 should be entered
Line 4 simply divides the amount on either line 1 or 2c by the number of pay periods on line 3. It’s the amount that’s provided in step 4c.
The deductions worksheet is for anyone who plans to itemize deductions. Since the implementation of the TCJA increased the standard deduction, far fewer people have been itemizing their deductions in recent years. Many high-earners will still itemize, however, so proceed accordingly.
For 2023, if you believe your itemized deductions will exceed $13,850 (if you’re single or married filing separate), $27,700 (if you’re married filing jointly), or $20,800 (if you’re the head of household), you should consider filling out the deductions worksheet.
Anyone filling out this worksheet should have their prior-year tax return handy to help get a good idea of what those deductions might be.
Should I fill out the 2023 W-4?
The short answer is: It depends.
Here’s a list of questions to ask yourself :
- Are you married? If yes, does your spouse work?
- Do you or your spouse have a second job?
- Do you have any new dependents?
- Is there a chance that you won’t use the standard deduction?
- Did you get a large tax bill or have a large refund last year?
If you answer “Yes” to any of those questions, then we recommend revisiting your W-4. If you are hired in 2023, then you must complete the new W-4.
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You can also refer to the new W-4 Frequently Asked Questions published by the IRS, which provides further guidance on whether you should adjust your W-4 elections.
The tax withholding estimator
Now, some of you are probably giving us side-eye now that we’ve suggested that you go through all this work. To make it easier on you, we recommend checking out the IRS’s withholding estimator.
(In the most recent version of this article, the tax withholding estimator is using the 2022 IRS withholding tables, because the IRS has not yet updated the calculator for the new year.)
Anyone who wants to use the estimator will need to be prepared with similar information that’s requested on the W-4 worksheets.
If you’re interested in using the estimator, you should have the following:
- Your most recent pay stub. It should include the amount of federal income tax withheld so far in the current tax year.
- A completed copy of your most recent tax return. It will help with estimating income and other items for the current tax year.
It’s important for anyone using the estimator to know that it will only be as accurate as the information entered. If you throw in a “best guess” for the requested information, the result will not be as precise.
The withholding estimator will spit out an approximation of what someone’s tax liability will be for their tax return and whether their current withholding is enough to meet that obligation. Depending on a person’s situation, this information may cause them to make changes to their W-4.
We’ll leave everyone with this: The IRS recommends that taxpayers with the following profiles check their withholding:
- 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 like the Child Tax Credit.
- People who itemized deductions in the previous tax year.
- People with high incomes and more complex tax returns.
Finally, if you fill out a new W-4, be sure to submit it as soon as possible in the new year. You’ll want the adjustments to take effect sooner rather than later, so the right amount of taxes are withheld from your paycheck for as much of the year as possible.
The new Form W-4 doesn’t have to be confusing. Hopefully, this guide and collection of W-4 resources will help you avoid any surprises at tax time.