Key takeaways
- The W-4 hasn’t used allowances since 2020. You now enter dollar amounts instead: dependents, other income, deductions, and extra withholding.
- Filling in only your name and filing status works for a single job with no dependents and no other income.
- Two jobs or a working spouse is where people go wrong. A couple earning $60,000 each who skip Step 2 would be under-withheld by about $4,360 for 2026.
- Step 3 turns the child tax credit into lower withholding now instead of a bigger refund later.
If you’re looking for how many allowances to claim, the answer is none, because they no longer exist. The IRS redesigned Form W-4 for 2020 to match the tax law changes that removed personal exemptions. Allowances were based on those exemptions, so they went away, replaced by five steps that use actual dollar amounts.
The five steps
Step 1: Personal information and filing status. Single or married filing separately, married filing jointly, or head of household. This alone sets a baseline that accounts for your standard deduction.
Step 2: Multiple jobs or spouse works. Complete this if you hold more than one job at a time, or you’re married filing jointly and your spouse also works. Choose one of three options:
- (a) Use the IRS Tax Withholding Estimator (most accurate).
- (b) Use the Multiple Jobs Worksheet on page 3 of the form.
- (c) Check the box in Step 2 on the W-4 for both jobs. This works well when the two jobs pay about the same.
Step 3: Claim dependents. If your income will be $200,000 or less ($400,000 or less if married filing jointly), multiply the number of qualifying children under 17 by $2,200 and add the form’s amount for other dependents. This reduces withholding by the credit you expect.
Step 4 (optional): Other adjustments.
- (a) Other income not from jobs, such as interest, dividends, or retirement income, so tax is withheld for it.
- (b) Deductions beyond the standard deduction, if you expect to itemize or claim certain adjustments to income.
- (c) Extra withholding per pay period. A simple way to cover side income or fix a past shortfall.
Step 5: Sign. An unsigned W-4 isn’t valid.
Example 1: two earners, one common mistake
A married couple each earns $60,000. Each fills in only Step 1 (married filing jointly) at their own job.
The problem: each employer’s withholding assumes that paycheck is the household’s only income, so each one applies the full joint standard deduction and the lowest brackets. The deduction gets counted twice, and too little is withheld.
| Withheld for the year | Actual federal income tax | |
|---|---|---|
| Both skip Step 2 | $2,840 + $2,840 = $5,680 | $10,040 |
| Both check the Step 2 box | $5,020 + $5,020 = $10,040 | $10,040 |
Skipping Step 2 leaves them about $4,360 short at tax time, and possibly facing an underpayment penalty. Checking the box on both W-4s fixes it, because the jobs pay the same.
If the jobs pay very differently, the Estimator or the Multiple Jobs Worksheet is more accurate than the checkbox.
Example 2: one earner with children
A married couple filing jointly with one income of $95,000 and 2 children under 17. With 2026 figures:
| Withheld for the year | |
|---|---|
| Step 3 left blank | $7,040 |
| Step 3: 2 × $2,200 = $4,400 | $2,640 |
| Actual federal income tax after the child tax credit | $2,640 |
Leaving Step 3 blank would over-withhold about $4,400, which comes back as a refund the next spring. Filling it in puts that money in their paychecks through the year instead.
(These examples assume wages are the only income and the standard deduction applies. Real results vary with pre-tax deductions, other income, and credits.)
Big refund or a bill: which is better?
A large refund means you lent the government money at 0% interest. A large bill can come with an underpayment penalty and a scramble for cash. The goal is to land close to zero. A small refund is a reasonable safety margin.
Revisit your W-4 when:
- You get married or divorced, or have or adopt a child.
- You or your spouse start or leave a job, or take on a second one.
- Your income changes significantly, or you start freelancing.
- Last year’s refund or bill was larger than you’d like.
Quick answers for common situations
- Single, one job, no dependents: complete Steps 1 and 5 only.
- Side gig or freelance income: list it in Step 4(a), or add a flat amount in Step 4(c), to cover income tax. Self-employment tax may need quarterly estimated payments instead.
- Getting a big refund every year: check Step 3 and Step 4(b), or remove extra withholding in Step 4(c).
- Always owe: check Step 2, or add extra withholding in Step 4(c).
The paycheck calculator includes the W-4 fields, so you can see how each entry changes your take-home pay per paycheck. To check your full-year tax, use the income tax calculator, and see marginal vs. effective tax rates for how the brackets work.