Key ideas

1. Steps 1 and 5 are the only required ones. Name, filing status and signature. Leave Steps 2 to 4 blank if they don't apply, and payroll uses the standard deduction.
2. Two jobs means Step 2, on one form. Each job withholds as if it's your only one. Step 2 adds the missing tax on the highest paying job's form.
3. Kids lower withholding in Step 3. Enter $2,200 for each child under 17 and $500 for each other dependent, if your income allows the credit.

Vocabulary

Form W-4

The form you give your employer to set how much federal income tax is withheld from each paycheck.

Tax withholding

Income tax your employer takes out of each paycheck and sends to the IRS for you, as a prepayment of your yearly tax.

Standard deduction

A flat amount the IRS lets you subtract from your income before tax is figured, if you do not itemize deductions.

Child tax credit

A federal credit of up to $2,200 per child under 17 for 2026, partly refundable.

Dividend

A payment a company makes to its shareholders out of its profits, usually in cash and often every 3 months.

Itemized deductions

Specific expenses, like mortgage interest, state and local taxes and charity, that you can list and subtract from income instead of taking the standard deduction.

Work it out

Dana is single with no kids. She earns $45,000 at her main job, paid every two weeks, and $15,000 at a weekend job. She uses the Step 2(b) worksheet.

1. Main job wages
2. Weekend job wages
3. Total wages
4. Extra tax from the single table
5. Pay periods at the main job
6. Step 4(c), extra per paycheck

Check yourself

1. You are single with one job and no kids. Which steps of the W-4 do you need to fill in?

   • A. All five steps
   • B. Steps 1 and 5
   • C. Steps 1, 3 and 5
   • D. Only Step 4

2. The Step 2(b) worksheet gives you $2,600 of extra tax and your job pays monthly. What goes in Step 4(c)?

   • A. $100
   • B. $2,600
   • C. $216.67
   • D. $108.33

3. Who can claim exemption from withholding?

   • A. Anyone who wants a bigger paycheck
   • B. Anyone under 25
   • C. Anyone with a second job
   • D. Someone who owed no federal income tax last year and expects to owe none this year

Your turn

Open your latest pay stub and find the federal income tax line. If you have two jobs, a working spouse or kids, run the IRS Tax Withholding Estimator and give payroll the W-4 it produces.