The Beginner’s Guide to Filling Out a W-4

Filling out a 4-page W-4 form can be a huge hassle. It’s not a good idea to rush through it, though, because a small mistake now can mean withholding too much or too little of your salary for covering your taxes. There have also been several recent changes to the W-4, so you may need to make some adjustments to your current form on file.

No worries, though, USAgencies Credit Union is here to help! We’ll walk you through a W-4 form and show you how to fill it out in five easy steps. It’s important to note that only Step 1 and Step 5 are mandatory; the rest are optional.

Step 1: Enter your personal information

First, you’ll need to fill out your personal information, including your legal name, residential address and Social Security number. You’ll also be asked to indicate whether you are filing taxes as a single individual, a married partner filing jointly or as the head of a household. According to the IRS, “Head of household” should only be checked if the filer is not married and pays more than half the costs of keeping up a home for themselves and another qualifying individual.

If you believe you are exempt from filing taxes, you may need to complete Step 1(a), Step 1(b), and Step 5 (you’ll also write “Exempt” in Step 4(c), as indicated below.) Before doing this, though, make sure you are truly exempt, which means you have no tax liability and did not need to file a tax return last year. Mistakenly filing as exempt can land you a giant bill come tax time, complete with penalties for late payments.

If you are a single tax filer or married to a nonworking spouse, have no dependents, only have one job and aren’t claiming deductions or credits beyond the standard deduction, you can skip the next three steps. Just sign and date your form now.

Step 2: Multiple jobs or spouse works

You only need to complete Step 2 if you hold more than one job, or you are married and filing jointly with an income-earning spouse. Be sure to read the instructions carefully. You’ll have three options in Step 2:

  • Use the IRS’s online Tax Withholding Estimator to determine how much to withhold below in Step 4(c).
  • Fill out the Multiple Jobs Worksheet, provided on page three of Form W-4, and enter the result in Step 4(c), as explained below. The IRS recommends only filling out the worksheet on one W-4 form per household, entering only the result of the highest-paying job.
  • You can check off this box on the W-4 form if there are only two jobs in total and both jobs have similar pay.

Step 3: Claim dependents (if applicable)

If you have multiple jobs, or if you are married filing jointly and you and your spouse each have a job, you’ll also complete Step 3 on the W-4 form for the highest-paying job.

Step 3 involves some math: If your income is $200,000 or less, or $400,000 or less if you are married and filing jointly, multiply each qualifying child under age 17 by $2,000 and each additional dependent by $500. Add up these numbers and list the total as indicated by Step 3 on the W-4.

Step 4: Make other adjustments (optional)

Step 4 is optional, but you may want to fill it out if you have multiple jobs, or you are married filing jointly and you and your spouse each have a job. If this applies to you, fill out lines 4(a) and 4(b), but only for one of these jobs. Here, too, the IRS recommends filling out these lines on the W-4 form associated with the highest-paying job. These lines can be left blank on your other W-4 forms.

For line 4(a), you’ll tally up all other taxable income not earned from jobs, including interest, dividends and retirement income. This will enable you to deduct the necessary tax out of your paycheck now so you don’t have to pay it later.

For line 4(b), you’ll need to turn to Page 3 on your form and fill out Step 4(b) — Deductions Worksheet. This worksheet will help you determine whether you’re better off taking the standard deduction or itemizing your deductions. You’ll also be able to tally up any other applicable tax deductions, such as student loan interest or deductible IRA contributions.

Once you’ve filled out lines 4(a) and 4(b), you’re ready to fill out line 4(c), which indicates the amount of additional tax you’d like withheld each pay period, such as taxes for a side job you hold as an independent contractor or gig worker. You may have already calculated this number when you completed Step 2 above. If you are exempt from filing taxes, write “exempt” here, as mentioned above.

Step 5: Sign here

Don’t forget to sign and date the W-4 before turning it in to your employer. If you’ve filled it out carefully, you should have just the right amount of money withheld from your paycheck so that you won’t have a huge tax bill to pay in April, and you won’t have a large refund either.

If your life circumstances change and you need to change something on your W-4, you can always make an adjustment. If you get married, have a baby or take on a second job, you’ll need to adjust your W-4 accordingly.

W-4, done!

How to Read a Paystub

Does your paystub puzzle you? Do the myriad boxes with taxes, deductions and credits make you a little dizzy? USAgencies Credit Union is here to demystify things!

Q: My accountant suggests I review my paystub to see if any changes need to be made to the amounts withheld, but I’m finding that to be an impossible task. I always receive my paycheck via direct deposit and I can’t make heads or tails out of the numbers or information on my paystub. Where do I begin?

A: Having your paycheck directly deposited into your checking account can be super-convenient, but it can also lead to being unfamiliar with your paystub. It’s important to review your paystub occasionally to check for possible errors and to review the deductions, as your accountant suggests. No worries, though, USAgencies Credit Union is here to help! We’ll walk you through a typical paystub and break down all the numbers and information so, going forward, you can do it on your own.

Navigating your paystub

Before reviewing the actual numbers, let’s take a moment to explore the way a paystub is structured.

A typical paystub will have your employer’s information in the upper left-hand corner, followed by the pay period for that paycheck. The upper right-hand corner will be stamped with the date the payment was issued.

Moving downward on the left-hand side, a section titled “Gross Pay,” will list the employee’s gross salary per pay period, along with any additional payments, such as overtime pay and benefits. Running parallel to these numbers will be two columns, one labeled “Current,” and the other labeled “YTD,” or year-to-date.

The right side of the paystub will be designated for tax information and deductions. Each of the items listed here will have separate numbers for current amounts and YTD.

Finally, the paystub will summarize all the information and provide a total for net pay.

Now let’s talk about what each of these items means.

Gross pay

Gross pay refers to the total sum of money earned in a pay period before taxes or deductions are withheld. This number represents the employee’s taxable income for the pay period.

The columns labeled “Current” and “YTD” help the employee track how much they’ve earned and paid in taxes and deductions for the pay period, and for the entire year through the respective pay period.

The “Gross Pay” section often includes the employee’s rate per hour and the number of hours worked in the pay period. When multiplied, these two amounts should be equal to the total gross pay.

There may also be various other payments listed here, such as overtime pay, bonuses and commissions.


In this section, the paystub lists the various taxes the employee and employer pay each pay period.

Here are the most common taxes listed on paystubs:

    • Federal income tax. Uncle Sam takes a bite out of every employee’s paycheck. The employer will use several pieces of information to determine an employee’s annual tax liability, including the employee’s marital status, income level and the amounts of allowances listed in their W-4. The estimated tax liability will be divided by the number of pay periods in a year to reach the amount that appears on the paystub. The employer will send this tax directly to the federal government.At the end of the year, the difference between the employee’s actual tax liability and the amount withheld will either be refunded to the employee or collected from them, as necessary. Employees can choose to have more or less money deducted from each paycheck by adjusting the number of allowances listed in their W-4s.
    • State taxes. Some states collect state income tax for each pay period.
  • Federal Insurance Contributions Act (FICA). This refers to the law that requires every employee to contribute to the Social Security and Medicare programs with each paycheck. These contributions sometimes appear separately.By law, every employee must pay 6.2% of their gross income to the Social Security fund. Employers must contribute an additional 6.2% for each employee. Self-employed workers must pay both the worker and employer portions of this tax, effectively doubling their Social Security tax liability.Medicare tax liability is calculated as 1.45% of a worker’s gross income. Employers must pay an additional 1.45% for each employee they hire. Here, too, the self-employed must cover both contributions and pay 2.9% of their earnings to Medicare.Most paystubs will separate the employer’s tax liability for these programs and the employee’s tax burden.


Besides for these mandated taxes, many workers will find additional deductions on their pay stubs. These include deductions for insurance coverage; deductions for a health savings account, which allows employees to set aside pre-tax dollars to be used for medical expenses; childcare deductions; and deductions for retirement savings plans, including contributions to a 401K or IRA account.

Some paystubs will include a sub-section for employer contributions. This refers to any employer-sponsored contributions for retirement, healthcare costs and other benefits.

In summary

The final section of a paystub will summarize all the information listed above it and highlight the employee’s net pay, or the amount of money the employee will actually see on their paycheck. This section will also list any reimbursements, or money the business owes the employee for using their own funds for business-related expenses. In addition, the summary will include gross earnings, deductions and contributions and finally, the actual check amount.

Now that you know what each item on your paystub means, you can easily review it and check it for errors. You work hard for your money — don’t lose out from a careless mistake.

Member Moment: Ryan’s Story

At USAgencies Credit Union, not only do we provide highly personalized service to our members, we are also on constant lookout for our members’ financial life. Which includes staying on top of any unusual activities in members’ accounts. Our member, Ryan, would love to share his member moment on why he wouldn’t switch banks for anything.

Tell us a little bit about yourself.
Between battling clinical depression and Dyspraxia as a kid, it was tough growing up. However, despite all of those setbacks, I am now a successful adult!

I work as a security guard, I have an amazing girlfriend and a lovely apartment. I enjoy video games, mainly survival horror games. I also enjoy to draw and have gotten decent at it!

What is your favorite USAgencies’ moment as a member?
I started using USACU when I was a young man, mostly because my father is a member. I wouldn’t switch banks for anything. The staff is always helpful and friendly, they warn me instantly if there is any odd activity on my account and their mobile banking is divine!

Overall I am very happy with USACU and I always recommend it to whoever will listen!

Finally, I want to add that no matter where you are in life, no matter how low you may feel, there will be an ending to it and you will have your day! I know that’s kinda clichè to say, but there are good people out there willing to help (Even in the banking world)!

We’re greatly inspired by your story Ryan! And thank you for sharing the stunning photo.

Want to share your USAgencies moment? Submit your story to or via telephone at 503-275-0300. We’d love to hear from you!

A Guide to Understanding Financial Terms

Provided in Partnership with GreenPath Financial Wellness.

When reading about credit cards, mortgages, or other financial products, you may encounter financial terminology and acronyms that you aren’t familiar with. Please Note that these descriptions are a guide only and are not legal definitions.


Adjustable-Rate Mortgage
An adjustable-rate mortgage (ARM) is a mortgage that offers the borrower a fixed interest rate for a set amount of time. After that time expires, the interest rate on the remaining balance varies throughout the life of the loan. Depending on the terms of the mortgage, the interest rate resets each month or year. This type of mortgage is also called a variable rate mortgage.

Annual Percentage Rate
The Annual Percentage Rate (APR) is the yearly cost of borrowing money. APR includes the interest and fees charged over a one-year period. Many types of debt include an APR such as credit cards, auto loans, mortgages and personal loans. The APR helps borrowers choose credit card offers, mortgages, loans, etc.


When referring to debt, a balance is the amount of money remaining to be repaid on a loan, credit card or mortgage. When the term “balance” refers to a checking or savings bank account, the balance is the amount of money present in the account.

Balance Transfer
A balance transfer refers to moving a balance from one account to another account, which is often an account at another financial institution. It most commonly describes transferring outstanding debt owed on a credit card to an account held at another credit card company.

Balloon Payment
A balloon payment is the money owed on a loan when the loan term expires (usually after 5-7 years). When the term is over, the borrower must pay a balloon payment for the total amount remaining on the loan, or the borrower can choose to refinance the loan for new terms and rates. Balloon loans sometimes allow the borrower to transfer the remaining amount automatically into a long-term mortgage.

When an individual or a company has debt that cannot be repaid, declaring bankruptcy gives the individual or company legal protection from the debts. Bankruptcy is a legal process that can offer relief from some or all debts, depending on the type of bankruptcy.

A budget is a written plan that tracks monthly expenses and income. It is used to help manage finances, keep current with expenses and save money.


Card Holder
A card holder is the person who is issued a credit card, along with any authorized users. The primary card holder is responsible for credit card payments. Credit card holders are protected by federal lending laws that protect consumer rights.

Cash Advance
A cash advance is a loan issued from a creditor. The most common cash advances are issued by a credit card or through a loan taken in advance of a paycheck. These types of cash advance loans charge special interest rates and fees on the amount of the advance. A credit card cash advance is typically the costliest credit card transaction compared to purchases or balance transfers.

Cash Advance Fee
A cash advance fee is a charge made by the bank or financial institution that the borrower owes after taking a cash advance loan. This fee could be either a one-time, flat fee that is owed at the time of the transaction or a fee charged as an annual percentage of the amount of the cash advance.

Collateral is an asset that a lender accepts as security for a loan. If a borrower defaults on their loan payments, the lender has the right to seize the collateral and sell it to recoup any losses.

Collections occur when a creditor, or a business, like a utility company, sells past-due debt to an agency to recover the amount owed. The delinquent debt could be past due credit card debts, utility charges, medical bills, cell phone bills or other payments that are over 6 months past due. Collection agencies attempt to recover past due debts by contacting the borrower via phone and mail. See The Fair Debt Collection Practices Act for laws that protect consumer rights during the collections process.

Conventional Mortgage or Loan
A conventional mortgage or conventional loan is available through a private lender or two government-sponsored enterprises—Fannie Mae and Freddie Mac. Conventional loans are considered risky because they’re not guaranteed by the government. These mortgages can have strict requirements and higher interest rates and fees.

Credit refers to money that is borrowed that the borrower will need to repay.

Credit Card Charge-Offs
A credit card charge-off occurs when a borrower does not pay the full minimum payment on a debt for several months. At that time, the creditor writes it off as a bad debt. Note that a credit card charge-off doesn’t absolve a borrower of responsibility for the debt. Interest is still owed on the balance. Even after a credit card charge-off, the lender could turn over the account to a collections agency.

Credit History
A person’s credit history develops as they borrow, repay and manage their loan payments, expenses and other transactions. Future loans depend on a solid credit history, because lenders check this information.

Credit Report
A credit report is a statement that has information about a person’s credit history, including loan paying history and the status of credit accounts. Lenders use credit reports to help them decide if they will loan money and what interest rates they will charge.

Credit Score
A credit score is a number based on a formula using the information in a person’s credit report. The result is an accurate forecast of how likely that person is to pay bills or repay loans. Lenders use credit scores to determine what interest rate they will offer on credit cards, mortgages, car loans and other loans.

A creditor is a person or institution that extends credit by lending a borrower money. The borrower agrees to repay the funds under agreed upon terms.


Debt is money owed to a lender, such as debt from credit cards, student loans, or a mortgage.

Debt Consolidation
Debt consolidation means that a person’s debts, whether credit card bills or loan payments, are rolled into a new loan with one monthly payment. A debt consolidation loan does not erase debt. Borrowers might pay more by consolidating debt into another type of loan.

Debt Management Plan
A debt management plan is when an organization works with creditors to reduce a borrower’s monthly payment and interest rates. People working through a debt management plan typically take 3-to-5 years to pay off debt. For those who team with a national nonprofit like GreenPath, a Debt Management Plan is delivered by financial counselors certified by the National Foundation for Credit Counseling (NFCC) who receive training in compassion and empathy.

Debt Counseling
Borrowers receive debt counseling (also called credit counseling) when a trained credit counselor reviews their personal finances, debt and credit history to make personalized recommendations to help manage financial challenges. In the case of GreenPath, debt counseling is provided by certified financial counselors who take into consideration a person’s total financial picture, from outstanding credit card payments to overall financial health.

Debt Settlement
Debt settlement is a process of negotiating with creditors to accept a percentage of the full amount on debt that is charged off or severely delinquent. For-profit debt settlement companies operate to deliver profits to their organization. As part of the for-profit business model, debt settlement employees are often paid on a commission basis, based on the fees they collect from consumers.

A default on a loan occurs when a loan payment is not made by the borrower according to the payment terms of an agreement.

A loan deferment is when a lender agrees that a borrower can pause making monthly loan payments for a set amount of time. Loans that are deferred are not forgiven. The borrower still owes the money and must repay the debt. Deferments are often available with student loans to provide the borrower with a set amount of time before making any payments.

When a borrower is late or overdue on making a payment, such as on payments to credit cards, a mortgage, an automobile loan or other debt, it is called delinquent. People who are delinquent, or late, with making payments may be charged a late fee.


Fair Debt Collection Practices Act
The Fair Debt Collection Practices Act is a set of laws that protect consumer rights during the debt collection process.

Fannie Mae
Fannie Mae, the informal name of the Federal National Mortgage Association, is a U.S. government-sponsored enterprise that buys mortgages from lenders, bundles them into investments and sells them on the secondary mortgage market. Typically, Fannie Mae purchases home mortgage loans from commercial banks or big banks.

Finance Charge
A finance charge is the cost of borrowing money. The cost to a borrower includes interest and other fees. Lenders typically set finance charges as a percentage of the amount borrowed. Some lenders might set a flat fee finance charge.

Fixed Rate
A fixed rate is an interest rate that stays the same for the life of a loan, or for a portion of the loan term, depending on the loan agreement.

Forbearance is a process when a lender agrees to a lower payment or no payment for a temporary period of time. Forbearance is not loan forgiveness. After that time expires, the borrower may face higher payments, accrued interest or an extended loan term.

Foreclosure is a legal proceeding that happens when a borrower does not make payments on a secured debt. The lender may start legal foreclosure proceedings to seize the property associated with the debt. As an example, default on a mortgage could result in foreclosure and auction of the property.

Freddie Mac
Freddie Mac, the informal name of the Federal Home Loan Mortgage Corporation, is a U.S. government-sponsored enterprise that buys mortgages, combines them with other forms of loans, and sells the debt on the secondary mortgage market. Typically, Freddie Mac purchases home mortgage loans from smaller banks and lenders.


Grace Period
A grace period is a set period of time in which borrowers do not have to pay finance charges or interest if they pay balances in full. Revolving credit card lending provides a borrower with a grace period.


Interest refers to the cost of borrowing funds, paid by to the lender by the borrower. Interest also means the profit that accrues to those who deposit funds in a savings account or investment.

Interest Rate
An interest rate is the fee lenders charge a borrower, calculated as a percentage of the loan amount. The percentage charged when borrowing money is known as the interest rate.


Loan Forgiveness
Loan forgiveness means a borrower is no longer obligated to make loan payments. With student debt loan forgiveness, the borrower must meet certain criteria such as actively serving in the military, performing volunteer work, teach or practice medicine in certain types of communities, or must meet other criteria specified by the forgiveness program.

Loss Mitigation
Loss mitigation is the process when mortgage servicers work with borrowers to avoid foreclosure.

Loan Modification
Loan modification is when a lender makes a permanent change to loan terms. The modifications could include changing the interest rate, type of mortgage or extending the time to pay the mortgage balance.


Minimum Payment
The minimum payment is a payment made on a loan or credit card that is specified by the lender as the smallest payment amount due. Borrowers can pay more than the minimum payment.

A mortgage is the loan a borrower takes on from a lender to purchase real estate.


Past Due
Past due is when a payment has not been made by its due date. Borrowers who are past due will usually face penalties and are subject to late fees.

Private Mortgage Insurance
Private mortgage insurance is a type of mortgage insurance that might be required for borrowers to pay for with a conventional loan. Private mortgage insurance protects the lender in the event a borrower stops making payments on the loan.


Reinstatement refers to a lump sum payment that makes an account current when the borrower pays everything that is owed. This payment would include any missed payments and fees.

Repayment Plan
A repayment plan is a written agreement for borrowers who are past due on loan payments. This option allows the borrower to pay the late amount as a smaller addition to the regular monthly payment, spread out over several months.

Revolving Credit
Revolving credit is when a creditor increases the credit limit to an agreed level as a borrower pays off a debt, such as a credit card. Revolving credit may take the form of credit cards or lines of credit with other lenders.


Secured Debt
A secured debt is a loan that allows the lender to seize the asset or collateral used to acquire the debt to repay the funds advanced to the borrower in the event of default. Examples of secured debt are mortgages and auto loans. In these cases, the item being financed is the asset or collateral for the financing.

Short Sale
A short sale is when a homeowner in financial distress sells property for less than the amount due on the mortgage.


Unsecured Debt/Unsecured Loan
Unsecured debt or an unsecured loan is a loan that is not backed by an asset or collateral. It is riskier than secured debt. The interest rate for unsecured debt is normally higher than for secured debt.


Variable Rate Mortgages
A variable rate mortgage is a mortgage in which the initial interest rate is fixed for a period of time. After that period expires, the interest rate on the outstanding balance varies throughout the life of the loan. Depending on the terms of the mortgage, the interest rate resets each month or year. This type of mortgage is also referred to as an adjustable-rate mortgage (ARM).

Additional resources for Financial Wellness:

Through our partnership with GreenPath, you have direct access to many resources for improving your financial wellness, including free financial counseling. GreenPath can help you take control of your financial future, connect with GreenPath at (877) 337-3399.

Can’t call right now? Request a call from our partners at GreenPath today.

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