How to fill out a W4 Form 2022 - Explained For Beginners

welcome back to our Channel clear value tax my name is Brian Kim I'm a certified public accountant and in today's video we're gonna walk you through the w-4 form 2020 this is the most updated and newest version this is completely different than the w-4 form 2019 so this is brand new so let's walk through this line by line on the form but let me preface very quickly by just saying that this form the w-4 this is what determines how much taxes to withhold from each and every one of your paychecks so you do not want to be under withholding your taxes because if you do then you're gonna find out that you have a tax balance to do when you do your tax return and you also might be subject to penalties and on the flip side you do not want to be wildly over paying your taxes you don't want to be paying too much taxes because if you do yes you'll get that refunded back to you if you if you withhold more than you should have you'll get that refunded back to you when you do your tax return that's where your refund comes from however that's like giving an interest-free loan to the government so rather than you just over paying your taxes and waiting for you to recoup that by doing your tax return it's better for you to have that money in your hands in your pockets during the course of the year so you do not want to set the w-4 to under withhold you do not want to set it to over withhold you want to try to get just rights so that's what we're here to do so let's walk through this form line by line welcome to the w-4 form 2020s so let's see how quickly we can fill out this form let's walk right through this so the first one is asking for your first name in this example will be John last let me go Social Security number and of course that be your address okay so let's choose what you are so if you're single or married filing separately then you'll click this box if you're married filing jointly and then you'll click this box if you're head of household you click on this box so their definition of head of household is that I'm married and pay more than half the costs of keeping up a home for yourself and a qualifying individual a qualifying individual for example would be a child so if that's applicable to you then check this box off these are different tax rates that they're going to be withholding taxes for your paycheck set so pick the one that's most applicable to you okay so let's let's move on to section 2 this is applicable to people who are married filing jointly and both spouses are working this is also applicable to people who hold more than one job at a time so if you are single and you do not have more than one job or you do not have more than one job then you can skip this section and you can move along and if you're married filing jointly and only one spouse is working then you can move along you can go to this section of the video please skip ahead this is in applicable to you for everyone else please stay tuned so you're here because you're still watching this portion of the video if you're married filing jointly and you and your spouse are both working or you're single and you hold more than one job at a time so let me just tell you for the you hold more than one job at a time this is what's going on this is affecting the tax rates at which you should be holding your taxes let me give you a quick example so this clicks so let's just say you're working 10 jobs this is extreme let's just say you're working 10 jobs you get 10 w-2s and you make $10,000 at each of those 10 jobs so you're making essentially $100,000 but I each one of those jobs they each think that you're making only $10,000 for the year right so in that case they would be withholding at a very low tax rate because they think you're only making $10,000 for the year but in reality you should be withholding at a higher tax rate because in reality you're making $100,000 so a person making $100,000 should be withholding at a higher tax rates than a person making 10,000 so in that case you need to tell the payroll systems that information that you are working more than one job at a time so if you do not relay this information to them you're gonna be withholding and a much lesser rate than you should you're gonna be under withholding taxes and then you're most likely going to have a tax balance to you when you do your tax return so that's the theory and that's the mechanics behind this portion and same thing goes with the married filing jointly and both spouses are working it's the same example so if you're making a hundred grands and you do not signify to the payroll system that your spouse also makes 100 grand then they're gonna charge you taxes at a rates of someone only as a household making a hundred grand when they should be charging you taxes or what's holding taxes from you at a rates of someone or a household making 200 grands so you need to signify this to the payroll system and this is the section to do so so if you want the most precise answer to this section then you would go to this URL you'd fill out the questionnaire and then they would output you the answer which you would be putting right here this is all that this leads up to you foresee the extra withholding amounts so the most precise way to do this according to the IRS and according to the form the most accurate way to do this with holding for this step is to go ahead and do it on this IRS website right here okay but you know you can do that if you want that's your choice okay so the other way which I'm gonna walk you through is if you want the roughly accurate way you know this should be this should be good enough but if you want the most precise go to the URL on the rise website okay and then here's the simplest one if you're fortunately for you know sake of this situation if you and your spouse are making the equivalent amount of pay similar pay then rather than walking through these steps you can just click on this box and you're done you're done with the step two but let's say you're making different amounts of compensation that you need to either go use the a or use the B so in this example all you will go this way so this is gonna take you to page three so this is page one said right here page two and this is page three okay so basically you're going to be filling out this but let me show you how this works so let's just say an example that you're married filing jointly and then there is a person one of the spouses makes less and one of the spouses makes more so let's just say you start off with the spouse that's making more income in this example let's say the spouse that makes more income makes two hundred fifty thousand they follow this income range okay so you're going to be using this row and then you identify the spouse that makes less income let's just say they make fifty thousand in this example so you're right here so you're going to use this column okay so where are they intersect they're going to intersect here the spouse making more to a fifty grand and the spouse making less fifty grand let's just say 55 grams so it clearly falls in this column so it's ten thousand three hundred ninety so you're gonna use that to put it here on page three okay next what you want to do is go here enter the number of pay periods per year for the highest paying job so how many pay periods are there so pair P pay periods depend on how often you get paid if you get paid monthly there's only twelve pay periods if you get paid by monthly that means twice a month then there's 24 pay periods if you get paid bi-weekly and there's 26 pay periods so let's just say it's bi-weekly so you get paid every two weeks so enter the number of pay periods that's 26 so then just using the division you'll see that this is equating to 399 and 62 cents okay so that's the additional amount that you should be withholding each pay period so again this is affected by how many pay periods there are so 399 and 62 cents per pay period so you're going to enter that here into 4c okay so again this is all coming from page three and it says divide answer this amount here and step four see so that's why we brought it up here so that should completes your step two so if you're in the situation where you're single and you have more than one job please be using this please be using this section so find your appropriate section so in this example you know less we could use the same figures that if you were making 250,000 at one job and your second job you make 50 grams then that's going to be fourteen thousand five hundred and forty okay that's where they intersect so then you would go up to here and just pop in that number here so input fourteen five forty and adjust your pay periods and then this would give you the amount that you need to employ here then you would put that into where it belongs in step four and for C so that should get you finished in either situation for step two so moving on to step three if you just skipped our step two tutorial then this number two 319 62 that's from a process that we ran through in step two so you can just ignore that so for your situation you can just consider that blank or zero so moving on to step three this is the section where they want to know about your credits the biggest credits are the most common one is having children or qualifying dependents so for each child you're gonna get a $2,000 credits that's if your income limits apply if your income will be 200,000 or 400,000 if you're filing married filing jointly then this will be applicable to you if you're above those income levels this will be in applicable to you unless you're typing in or and putting all their credits so again the reason why they have these labeled here is because these are the most common ones so if you have qualifying children and these income limits apply to you you fall under or you qualify then this will be applicable to you so if you have children or under the age 17 you get a $2,000 credit per child so if you have two children the you would enter in 4,000 dependents you know a popular one you know more common one would be qualifying parents so you take care of your parents they live with you you know you you can get a credit for five hundred dollars if that's a situation you didn't put that here so this is just asking you for your your dependents so then this will affect how much taxes need to be withheld from you because this is a reduction of tax so this needs to be taken into consideration as well so you'll cut that here moving on to step four so step four here we are trying to see what other types of income that you have where no taxes are being withheld so in this situation we're trying to see if you'd have additional taxable income whether there's no taxes withheld and this is the place to make the adjustment for that to kind of make up for that deficiency because if you have taxable income and you're not holding taxes then you're gonna have a shortage you're gonna have a tax bound to do or it's gonna chip away at your refund so this is the spot to make up for that so here is step for a other income this is asking for the most common types of income where you have taxable income but you know taxes are withheld you know that's gonna include interest income dividend income you know a lot of times on retirement income in capital games too so take that into consideration and if you have those types of income you want to input that here to make up for the fact that you have taxable income and you're not withholding any taxes so in this example let's just write 3,000 so let's just say you have some interest and dividend income in amounts of $3,000 so this will take care of that just knowing that you have that income and no taxes withheld similarly if you're going to have deductions greater than the standard deduction so in other words if you're going to be taking and claiming the itemized deductions this is the spot to make that adjustments so in the situation where you're going to be using the standard deduction you can just ignore this you're done you don't need to input anything at 4 B because the standard deduction is just the deduction that everyone can to claim so let's just say that if you are single and you do not have a mortgage and you do not make a relatively large amount of charitable contributions charitable donations you can skip this this will be in applicable to you because you will most likely be using the standard deduction if you are single and you make let me see let me rephrase that so if you're single and you have a mortgage of over a hundred thousand dollars you will most likely need to fill out step four section B this deduction section because the reason why I say that is because I'm guessing that you have more than $100,000 loan and your interest rate is probably around three and a half percent four and a half percent so about approximately 4% so in that situation you're gonna have mortgage interest I'm also assuming that you're going to have property taxes and perhaps in most situations you'll have state taxes paid if you live in one of the states that pay state income taxes maybe you have some charitable contributions as well but regardless I think that you're going to be above the standard deduction amounts so in that case you're gonna be itemizing your deductions so that's why I say if you have a mortgage if you have a home and a mortgage of above a hundred thousand you're most likely going to be itemizing as a single person so in that case you're gonna be wanting to use the deduction worksheet on page three okay and let's just say that if you are a married person and you do not have a mortgage greater than three hundred and fifty thousand dollars and you do not make a wild amount of charitable contributions then you will most likely ignore this section as well 4b you'll ignore this the reason why I say that is that the standard deduction for married filing jointly it's going to be just above $24,000 in that situation if your mortgage interest is not above about $14,000 then you're probably going to use the standard deduction so I'm just assuming assumptions here that if you have a $350,000 mortgage you know and the interest rate that you receive is about four percent then the mortgage interest will be about fourteen thousand you'll have property taxes state taxes paid but that will be capped at ten thousand so that'll get you to the equivalent of the standard deduction amount of about twenty four thousand so if you do not have mortgage above three hundred fifty thousands and you are not making a lot of charitable contributions then you're most likely just gonna leave this blank but if you have a mortgage above three hundred fifty thousands or you have a lot of tradable contributions or a combination or you have a lot of medical expenses that qualify then yeah you're going to be working you're going to want to use the deductions worksheet on page three for more details so that you're appropriately adjusting for those circumstances however if that's not the case again you're gonna be leaving this blank well thank you so much for tuning in if you found that helpful please give us a thumbs up we'd highly appreciate that and also we're trying to be more community driven and interactive so we're gonna have a two hundred dollar Amazon gift card giveaway it's gonna be completely randomized we're gonna do it on live stream if you want to participate in that for absolutely free all you need to do is subscribe give us a thumbs up and leave any comment below if you do the trifecta then you will be automatically entered into our random giveaway so that'll occur later on the year after tax season when we're less busy of course so again thanks so much for tuning in we appreciate it and we look forward to making more videos where we can help you save on taxes and pretty much answer all your tax questions and be your tax resource again leave any questions or comments below thanks so much take care

Channel: ClearValue Tax

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Id: 9CfsvxPE8A8

Length: 17min 56sec (1076 seconds)

Published: Tue Dec 17 2019