Here are some tips on using the new W-4 Form:
Step 1 is self-explanatory
Step 2 is a feature that can help adjust your withholding in case you have more than one job. The problem is that when you have more than one job you often do not have enough taken out because the withholding charts are set up to withhold a certain amount from your check for a certain earnings period assuming that is the only check you are receiving. If that were the case, your taxes for the year would be roughly a certain amount so they divide the annual amount by the # of payment periods and withhold that amount of pay. Having more than one job has twice the income, but each job is only withholding the amount that would be due if that were your only pay for the year.
Any one of the 3 options on Step 2 (a, b, or c) should make it better than the old W-4 form did. You so not have to do all 3,
Then, do step 3 estimating your dependents
Finally do step 4 for other adjustments.
A way to check the W-4 that you are filling out, is to determine the amount you owe this year and divide that by the number of pay periods left. The amount you come up with is the additional amount you should have taken out this year over last.
You also need to look at your return to see if a lot of your refund was Recovery Rebate Credit. If it is, then subtract that from your refund or add it to your balance due to see what the calcs are for next year. At this point, we don't know for sure if there will be additional stimulus money next year in the return.
Your employer should be able to assist you because they have the withholding charts and can tell you the amount that should be withheld using the information entered on your new W-4.
In order to really make it work well, you should do an estimate of your tax return in the middle of the year or several times during the year to see if you are on track with the amount of withholding taken out at that time.
