W-4.

In plain English

Form W-4 (Employee's Withholding Certificate) is the form a new hire completes (and existing employees update when their situation changes) to set federal income tax withholding. The current W-4 (redesigned in 2020) no longer uses allowances; instead it asks about filing status, dependents, multiple-job adjustments, other income, and any additional amount to withhold. Most employees update it after marriage, a baby, a second job, or a meaningful raise. The form goes to the employer's payroll department, not the IRS.

01Why it matters

The W-4 is the lever that determines whether April brings a refund or a bill. A W-4 that overstates exemptions causes underwithholding and an April tax bill (plus possible penalties). An overly conservative W-4 causes overwithholding and a big refund, which is an interest-free loan to the federal government. The IRS publishes a free Tax Withholding Estimator at irs.gov/W4App that recommends how to fill out a W-4 based on a current pay stub and prior-year tax return.

02The math, step by step

A single filer earning $70,000 with no other income and no dependents typically submits a W-4 with filing status 'single' and no other adjustments; withholding lands close to actual tax liability. After a second job is added at $20,000, the same employee should redo the W-4 using Step 2 (multiple jobs) to avoid underwithholding by roughly $2,000 across the year.

03What this is NOT

04Receipts

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