W-4 for Two Jobs or a Working Spouse: Step 2 Explained

How do I fill out W-4 Step 2 for two jobs or when both spouses work?

Complete Step 2 if you hold more than one job at a time, or you file jointly and your spouse also works. Choose one of its three options, and put dependents, other income and deductions (Steps 3 to 4(b)) on only one W-4, ideally the highest-paying job's (Form W-4).

Step 4(c), labeled "Extra withholding", is the line that adds a set dollar amount to every paycheck.

A case is not simple when there is self-employment, rental or investment income, stock pay, work in two states, more than three jobs or more than one job paying over $120,000, a large balance due last year, or a spouse who is a nonresident. A nonresident alien reads Notice 1392 before completing the form, and cannot use the estimator (estimator FAQs).

Gather the latest pay stub for every job you and your spouse hold, and last year's return.

Why do two jobs or two working spouses end up with too little tax withheld?

Each employer withholds as if its job were your only one. Every paycheck calculation builds in a standard deduction and starts at the lowest tax brackets, but your return gets one standard deduction and stacks all the pay into the same brackets (IRS W-4 FAQs, question 10).

The result is a gap between what both employers withhold and the tax on the combined pay. Step 2 closes that gap. Skipping it can leave too little withheld, which can mean a balance due, and possibly a penalty, when you file.

Estimator, worksheet or checkbox: which Step 2 option is most accurate?

The estimator is the most accurate and the most private. Between the other two, the pay ratio decides: if the higher-paying job pays more than double the lower one, the worksheet is generally more accurate; if pay is closer than that, the checkbox is (IRS W-4 FAQs, question 11).

The estimator needs a pay stub from a job you already hold; it cannot estimate pay from a job you have not started. It may suggest a Step 3 amount even if you have no credits: that lowers withholding you are on track to overpay (estimator FAQs). The form also recommends it if you start the W-4 after the year begins, work only part of the year, or have bonuses, dividends, capital gains, business income or the extra Medicare tax on high wages (Form W-4).

W-4 Step 2(c) checkbox: does it go on both W-4s?

Yes. The Step 2(c) box works only when it is checked on the W-4 for each of the two jobs, and only when there are two jobs in total for you and your spouse (Form W-4).

When the box is checked, each employer cuts the standard deduction and the tax brackets in half and withholds from a separate checkbox column of its tables (Publication 15-T). Checking it on only one job leaves the other job withholding as if it were your only one, so the household still comes up short. With three jobs, the checkbox is not an option.

Multiple Jobs Worksheet: how do I turn the yearly amount into Step 4(c) per paycheck?

There is no flat amount for a second job: the worksheet's table gives a yearly amount from both jobs' pay and your filing status. Divide it by the number of pay periods of the highest-paying job and enter that per-paycheck figure in Step 4(c) of that job's W-4 (Form W-4, page 3). A married couple fills in the worksheet once, together, with both spouses' jobs; only the W-4 for the higher-paying of all those jobs gets the amount.

1. Pick the table for your filing status on page 5 of the form.
2. Find the higher-paying job's annual taxable wages (pay after pre-tax items such as 401(k) contributions) in the rows and the lower-paying job's in the columns. The amount where they meet goes on line 1.
3. With three jobs, look up the top two jobs (line 2a), then use their combined wages against the third job (line 2b), and add the two amounts.
4. On line 3, enter the highest-paying job's pay periods: 52 weekly, 26 every two weeks, 24 twice a month, 12 monthly.
5. Divide, and enter the result in Step 4(c) of the highest-paying job's W-4, plus any other extra amount you want withheld. Leave Step 2 blank on the other W-4s.

The most common mistake is entering the yearly amount in Step 4(c), which withholds it from every paycheck. If more than one job pays over $120,000 a year, or there are more than three jobs, the form points to Publication 505 or the estimator instead. If you have not given the other employers a W-4 since the form was redesigned, give them new ones too.

Which W-4 gets the dependents, deductions and other income?

Complete Steps 3, 4(a) and 4(b) on one W-4 only, and leave them blank on the others. Withholding is most accurate when they go on the highest-paying job's W-4 (Form W-4). If both jobs pay about the same, or which one pays more changes during the year, the choice matters less (IRS W-4 FAQs, question 12).

Step 3 applies if total income will be $200,000 or less ($400,000 or less if married filing jointly). The current Deductions Worksheet has lines for qualified tips, overtime, passenger vehicle loan interest, the seniors' deduction, other adjustments and itemized deductions. Claiming the same children on two W-4s cuts withholding twice for one credit.

Side work as a contractor carries self-employment tax, which the W-4 does not compute; use the estimator or Publication 505 to set extra withholding for it (IRS W-4 FAQs, question 13). You can instead pay tax on side or investment income through quarterly estimated payments. A bonus is often withheld at a flat 22%; see estimated tax in a big bonus year.

Do part-time, seasonal or short jobs count as multiple jobs?

A part-time or seasonal job counts when you hold it at the same time as another job, whatever its hours. Step 2 is about jobs held at once, not jobs held one after another (Form W-4).

• Two jobs at the same time, even a small one: use Step 2.
• One job ending and the next one starting: that is a switch, not two jobs. Each new employer needs a W-4.
• Working only part of the year: too much may be withheld. Your employer may agree to use the part-year method if you ask in writing, stating your last day of work for any earlier employer this year, that you expect to be employed no more than 245 days in the year, and that you use the calendar year as your tax year. It is not available if you start before May 1 and expect to work the rest of the year (Publication 505).
• Jobs that overlap for a few weeks, or change often: the estimator, rerun when the jobs change, handles this better than the tables.

Can I keep my second job or other income private from my employer?

Yes. Use the estimator or the Multiple Jobs Worksheet instead of the Step 2(c) box: either one ends in a single extra dollar amount in Step 4(c), which does not say where it comes from (Form W-4, "Your privacy").

For investment or retirement income, you can enter extra withholding in Step 4(c) instead of the income in Step 4(a), or pay estimated tax instead (IRS W-4 FAQs, question 14). The estimator can also fold deductions into Step 3, so you need not list them (estimator FAQs).

We married, divorced or changed jobs: when must I give a new W-4?

You must give a new W-4 within 10 days after a change listed below, but only if withholding for the rest of the year will not cover your tax for the year. Otherwise you may update it whenever you want (Publication 505).

Marriage is not on that list, but Publication 505 names it as a change to check withholding for. If you will file jointly and both of you work, redo Step 2 together and each give your employer a new W-4.

An employer must start using a new W-4 no later than the first payroll period ending 30 or more days after you hand it in.

Late in the year: estimate the shortfall with the estimator or Publication 505, then divide it by the paydays left in the year, not by a full year's pay periods. You can put it all on one job or split it between jobs. If your pay periods have been the same all year, you can also ask the employer in writing to use the cumulative wage method (each paycheck figured from your pay so far this year); the employer must agree (Publication 505). A mid-year Step 4(c) amount is sized for the months left, so the estimator page suggests updating the W-4 again in late December for the next year.

When a job ends: if the extra Step 4(c) amount sat on the job that ended, the remaining job may now withhold too little; if both W-4s had the Step 2(c) box checked, the remaining job keeps withholding at half brackets, which no longer matches the year's total. Either way, rerun the estimator with your latest pay stub and give a new W-4. Whether withholding alone avoids the underpayment penalty is covered in quarterly estimated tax payments.

A paycheck had no federal tax withheld, or far too much: what went wrong?

Start with the W-4 the employer has on file: compare the federal income tax line on the pay stub with the W-4 entries, and ask payroll if they do not match. The table lists the usual causes.

An employer cannot refund tax already withheld because of your own W-4 entries; you claim it on your return. If the employer withheld more than your W-4 called for, it can repay the error (Publication 505). A pay stub may show your Step 4(c) extra on its own line.

Can I claim exempt, and what if my W-4 cuts withholding too far?

You can claim exemption only if you had no federal income tax liability last year and expect none this year. Last year counts as none if your total tax on the return was zero (or less than certain refundable credits), or you did not have to file. Exemption stops federal income tax withholding, not Social Security or Medicare tax, and lasts one year: renew it by the mid-February date printed on the form. If your situation changes so you will owe income tax, give a new W-4 within 10 days; if you expect to owe next year, give one by December 1 (Form W-4; Publication 505).

The IRS reviews withholding. If it finds a W-4 overstates what you may claim, it sends you and your employer a lock-in letter setting the most your withholding may be reduced. You get a period to dispute it with a new W-4 and a written statement; after that, the employer must follow the letter until the IRS says otherwise. You can always give a W-4 that withholds more than the letter requires (Publication 505).

A W-4 statement that lowers withholding with no reasonable basis can bring a civil penalty of $500 per statement (26 U.S.C. 6682). Willfully false information can bring a criminal fine of up to $1,000, up to one year in prison, or both (26 U.S.C. 7205). Publication 505 says a simple error or honest mistake does not result in either penalty.

Does my state use the federal W-4 or its own form?

It depends on the state. Some states with an income tax use their own certificate, and the federal W-4 does not set state withholding there; others start from the federal W-4 unless you file the state form.

• California uses its own Form DE 4 for state withholding. For two earners or two jobs, it says to check "Single or Married (with two or more incomes)", and that withholding is usually most accurate when all allowances are claimed on the highest-paying job's DE 4 and none on the others. An extra per-paycheck amount on DE 4 line 2 is withheld only if the employer agrees; with no DE 4 on file, the employer must withhold as single with zero allowances (Form DE 4).
• Colorado makes its Form DR 0004 optional: without it, the employer figures Colorado withholding from your federal W-4. The form names a household that earns most of its income from one job as a reason to file it, with a separate certificate for each job (Form DR 0004).

Check your state tax agency's withholding certificate when you fix your federal W-4. If you live in one state and work for an employer in another, see remote work and state income tax.

Example

These figures are illustrative, in US dollars, and use the tables on the current Form W-4. Pay means annual taxable wages.

Spouses with unequal pay

Spouses filing jointly earn $84,000 and $25,000, both paid every two weeks. The higher pay is more than double the lower, where the IRS says the worksheet is generally more accurate. The married filing jointly table gives $3,420 a year. Divided by 26 pay periods, about $132 goes in Step 4(c) of the higher-paid spouse's W-4, with any children in Step 3 on that same form. The other spouse's W-4 leaves Steps 2 to 4 blank.

Two jobs with similar pay

A couple filing jointly earns $50,000 and $45,000. The lower pay is more than half the higher, where the checkbox is generally more accurate, so both W-4s would check the Step 2(c) box. Only one W-4 lists their two children in Step 3.

A second, part-time job

A single worker earns $70,000 full time and $12,000 part time, paid every two weeks at the main job. The single table gives $3,830 a year. Divided by 26 paychecks, about $147 extra goes in Step 4(c) of the main job's W-4.

Different for you?

• Side business, contract work or rental income: set withholding with the estimator or switch to quarterly estimated tax payments; get individual tax help if the income is large or irregular.
• A large bonus or stock pay this year: see estimated tax in a big bonus year and get individual tax help.
• You own an S corporation and pay yourself wages: see S corporation estimated tax payments.
• Two states, or the wrong state withheld: see remote work and state income tax.
• Your first year in the US: see first year as a US tax resident.
• Your spouse is a nonresident: see married to a nonresident.
• You work abroad for a US employer: see working abroad for a US employer.
• You owed a large balance last year or got a lock-in letter: see individual tax help.