Ask CPA Sam

Q. What does the box mean on the W-4 Form that says “Married but withhold at higher single rate?”

A. This is one of the most frequent questions I get. The answer lies in an understanding of federal withholding. There are two withholding tables used by employers to withholding federal tax. One is for those who check the box “Single” in the W-4. The second table is related to those who check the box for “Married” on the W-4. There are also two income tax tables: Married and Single. The selection you make on the Form W-4 tells your employer which tax table to use.

Because “Single” withholding rates are often higher than those for Married individuals, there are times when Married people should choose “Single” for their filing status. This could be needed in cases of both spouses working, or one spouse has two or more jobs or the couple experienced some sort of taxable event for which there was no withholding.

At most companies, simply selecting the “Single” filing status is enough. However, some companies actually track the marital status of their employees and use the Form W-4 for this purpose. While there may be other legal issues at work here as to the need for tracking this information, for that type of employer, the employee should probably select Married but withhold at higher single rate” instead.

Keep in mind that the ultimate goal with this form is to match your tax payments through withholding with the tax liability you expect to have when you file your 1040 form at the end of the year. Consistent, even payments throughout the year is the easiest way to make this happen.