W-4 with Two Jobs or a Side Hustle
Multiple income sources change your W-4 strategy. Here's exactly how to handle it.
By the Easy Guides Editorial Team
Why two jobs create a withholding problem
Each employer withholds taxes based only on the income you earn from them, they have no idea about your other job. If both jobs pay $40,000, each employer withholds as if $40,000 is your total income. But your combined income is $80,000, which is taxed at higher rates. The result: both employers underwithheld, and you owe money in April.
Two W-4 jobs: Step 2 is your fix
You need to complete Step 2 on at least one of your W-4s (ideally both). The three options:
Option A, IRS Estimator: Most accurate. Go to irs.gov/W4app, enter both incomes, and apply the calculated extra withholding to Step 4(c).
Option B, Worksheet: Complete the Multiple Jobs Worksheet (page 3 of W-4 instructions). Slightly more manual but doesn't require the IRS website.
Option C, Check the box: Simplest. Both employers withhold at the higher Single rate. You'll likely overwithhold slightly but you won't underpay.
W-4 with freelance or 1099 side income
Freelance income doesn't have an employer to withhold taxes. You have two options:
Option 1, Increase W-4 withholding: On your day job W-4, enter the estimated annual tax on your freelance income in Step 4(a) (other income). Your employer will withhold extra from each paycheck to cover it. Simple, no quarterly estimated tax payments needed.
Option 2, Pay quarterly estimated taxes: Make separate IRS quarterly payments on your freelance income. More work, but more flexible if your side income is irregular. If your side hustle earns over $1,000 in net profit, you likely need to do this or Option 1.
Our recommendation: if your side income is predictable, use Option 1, increase your day job withholding via Step 4(a). It's cleaner and removes the quarterly deadline pressure.
How much extra to withhold
A rough rule: add 25, 30% of your expected net freelance income to Step 4(a). This covers income tax plus self-employment tax for most people. Our W-4 calculator does the exact math based on your specific situation.
Common questions
How do I fill out a W-4 with two jobs?
Complete Step 2 so the jobs know about each other. Easiest accurate route: check the Step 2(c) box on both W-4s if the pay is similar. If not, use the IRS estimator and put the extra amount on line 4(c) of the higher-paying job.
Why do two jobs cause underwithholding?
Each employer withholds as if its paycheck were your only income, starting at the lowest tax brackets. Stacked together your real income sits in higher brackets, so the combined withholding falls short.
Do I fix both W-4s or just one?
Adjust the higher-paying job when using extra withholding, since it has the bigger paychecks to absorb it. If you use the Step 2(c) checkbox instead, check it on both jobs.