Identification

• Your W-4 helps your employer figure the amount of federal income tax to withhold from your paychecks. Unlike federal payroll taxes, such as Medicare and Social Security taxes, which are withheld at flat percentages of your pay, federal income tax withholding depends on the information you put on your W-4 and the IRS tax withholding tables, Circular E. Without your W-4, it's difficult for your employer to calculate your withholding. Consequently, the IRS requires your employer to withhold at single filing status with zero allowances if you fail to submit a W-4.
  
  

Determination

• The top portion of your W-4 includes a worksheet for you to claim your allowances, which includes your dependents. If you are married with dependents, put that information on lines B and D, respectively, of the form. Read the IRS guidelines for dependents before claiming as such. A dependent represents a "qualifying child" who must meet the IRS relationship, age, support and residence test. To arrive at your total allowances, add up lines A through G and put the amount on line H.
  
  Check the appropriate "married" box on line 3 of the bottom portion of your W-4. Put your total allowances -- the amount from line H, which includes your dependents -- on line 7. Give the bottom portion of the form to your employer.
  
  

Calculation

• Each dependent or allowance you claim on your W-4 gives you an amount that lowers your taxable income. For example, for a weekly payroll period as of the time of publication, you get $71.15 per allowance. Your employer subtracts your total allowances sum from your gross income to arrive at your taxable income. In addition, claiming married puts you in a lower tax bracket than single.
  
  For example, if you claim married with three allowances and earn $500 weekly in 2011, you pay $14 weekly for federal income tax; but if you claim single, you pay $30 (see pages 38 and 40 of the 2011 Circular E).
  
  

Considerations

• Complete a new W-4 and submit it to your employer whenever your financial or personal situation changes. The key to understanding what to put on your W-4 is to carefully review the conditions for claiming dependents and allowances; this information is stated on the form. You are responsible for adjusting your W-4 so the appropriate amount of federal income tax gets withheld from your paychecks. Use the IRS withholding calculator, if necessary, to help you adjust the form.