W4 Entry Verifications

[rcnw]

Hey all, 

Wanting to check with the experts about the proper way to complete the following items and get your confirmation if I'm doing this correctly. Some background: My wife and I both work and receive W2's. We have 2 dependents and obtain rental income monthly. We did not have enough being withheld last year and want to make sure we get to see a positive return in 2026. 

1. Our rental income I assume would be entered in Step 4a. That step reads like you enter in the income expected over the entire year? e.g. We will earn $14k from a rental in 2025, so I enter $14k in step 4a?
2. Even though we both entered 2c, we still owed money last year. I'm not confident the option is taking out enough money. What is the downside of submitting some extra withholding under 4c? Whatever we pay extra we would just get back next year no?

[Bsch4477]

Yes, you get back what you over withhold. You don’t want to withhold too much since you would be giving the government money that could have been in your pocket but you don’t want to owe more than $1,000 which subjects you to a penalty. 

[KatherineS63]

Great question.  I am going to give you the long version answer first and then my short answer.

Thank you for your great question.  Here is what I tell everyone.  If you are owing money, the government(s) do not care if it comes from one source of income or multiple so sometimes you can just pick one source and have all the money come from that one source.  For example, if you have multiple employers or retirement accounts, maybe pick only the ones you want withholdings to come out of for federal and state.

(some states do not have income taxes so disregard if you are in one of those states)

Then look at these links to learn what a W4 looks like and how to fill one out.

How to fill out a W4  Instructions on how to fill out a W4

W4 calculator  Use to help fill out a W4

Form W4  Actual W4.  Line 4c is where you would add extra withholdings from each check.

Once you have filled out the W-4, then in a few months maybe use the links below to do a tax estimator.  This will tell you how much you might owe after making the changes.  You can do a tax estimator several times per year.  If you have changed your withholdings mid year, you will want to see that you keep owing less as the year goes on.

IRS Tax estimator This is a tax estimator that will time out so enter and print findings all at one sitting.

Tax caster  This is another tax estimator that will time out so enter and print findings all at one sitting.

For state withholdings, it is hard to find a tax estimator for each state but they will have a state withholdings form that you can fill out.  

Now the short answer, I also like to sometimes just stay with what is already on your W4 and just figure out what might be owed extra and then divide that by how many pay periods you have in a year and put that number on 4c.  Let's say you owe $1000 next year after changing your W4s.  Then take $1000/ (number of pay periods in the year) and put that amount on 4c.  Ex.  1000/52 (paid every week)=19.2 or rounded up to $20 per pay period.  

I would then do some tax estimators (see links above) later in the year and see if your extra withholdings are helping! 

I hope you find this information useful.  

Katie S