When you are hired as an employee, typically, you receive a series of forms to complete. One of these is a Form W-4, which is required by the IRS to make sure your employer withholds the correct federal income from your paycheck. That way, you don't overpay your taxes or have a big tax burden at the end of the year.
If you have multiple jobs, you must fill out a Form W-4 for each. Though each form generally has the same information included, there are a few important things to note when completing a W-4 for multiple jobs.
A W-4 form tells the IRS how much income tax your employers should withhold from each of your paychecks. This determination is based on the number of allowances and additional withholding amounts you report from the worksheets included with the W-4.
Advertisement Article continues below this adEach allowance you report reduces the amount of tax your employers withhold. However, it's up to you to calculate the appropriate number of allowances to claim based on an estimate of the tax you'll owe on the total earnings from all of your jobs, your filing status, and the credits and deductions you anticipate taking on your income tax return.
The IRS realizes that you may have more than one job at a time and developed a worksheet to help you properly fill out your W-4. To use the Two-Earners/Multiple Jobs Worksheet, you must first fill out the Personal Allowances or Deductions, Adjustments, and Additional Income worksheets. These worksheets account for your income credits, allowable adjustments and itemized deductions.
Advertisement Article continues below this adThe Two-Earners/Multiple Jobs Worksheet helps you make sure you're getting the right amount of taxes withheld from your paycheck. The worksheet starts with the total number of allowances you already estimated using one of the other two worksheets. Each successive line provides step-by-step instructions that essentially use the wages from your highest and lowest paying jobs to determine any additional amount of tax that needs to be withheld so that you don't underpay your tax.
The worksheet also allows you to add any additional withholding you'd like, to cover such things as self-employment tax.
You only need to fill out a single set of worksheets, even when preparing more than one W-4 form. The IRS recommends you either split your allowances between the Forms W-4 for each job or claim all your allowances with one employer and none with the other. You cannot claim the same allowances with more than one employer at the same time.
Advertisement Article continues below this adSince each allowance reduces the amount of taxes withheld, you need to consider which job it makes more sense to apply the allowances to. For instance, it may be more beneficial to you to withhold all allowances from your highest paying job and none from your other jobs. In that scenario, you will have less withheld from your larger paycheck and more from your others, keeping your tax burden minimal.
Keep in mind that you can always update your W-4s as needed, if your job or family situation changes.