It depends on whether or not you want a bigger refund. What you put on that form does not affect the taxes you owe at the end of the year. That form (W-4) is submitted to your employer so they know how much tax to withhold from your pay. If you complete the W-4 with your correct filing status and the number of dependents you will be claiming on your 2021 return, it is designed to maximize your weekly paychecks and leave you with no refund or no tax due at the end of the year. If you include your daughter on the W-4, your checks will be bigger, but your refund will be lower. If you don't, your weekly checks are less, but your refund will be bigger.
If you want a bigger refund, there is a place where you can indicate that you want more taken out each pay period. But if you do this, your weekly paychecks are less each week.
It all works out in the end, but it is your choice when it comes to planning for your refund. Some people like smaller checks and a bigger refund. Others (like me) prefer to have bigger paychecks and lower refunds. But again, it is your choice.
You can update the form throughout the year. Meaning if things change later in the year and you need bigger paychecks, you can revise the form to have less taken out.
What to know about the new 2020 IRS Form W-4 Employee’s Withholding Certificate
Fatten Your Paycheck and Still Get a Tax Refund
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