W-4 Step 4(a) and 4(b): Other Income and Deductions

How Step 4(a) and 4(b) works

The two lines push the payroll calculation in opposite directions. Step 4(a) raises the annual income payroll assumes, so more tax comes out; Step 4(b) raises the deduction payroll assumes, so less comes out. Both are annual figures, and neither one changes what you eventually report on the return.

Step 4(a) is for other estimated income for the year that will not carry withholding of its own. The form names interest, dividends, and retirement income, and instructs you not to include income from any job or from self-employment. The instructions add that if you complete Step 4(a) you likely will not have to make estimated tax payments for that income; Form 1040-ES stays available if you would rather pay it that way.

Step 4(b) takes the result of the Deductions Worksheet on page 4, not your itemized total. That worksheet adds four separate things: the deductions for qualified tips, qualified overtime compensation, and qualified passenger vehicle loan interest; the deduction for taxpayers age 65 or older; Schedule 1 Part II adjustments such as student loan interest, deductible IRA contributions, educator expenses, and alimony paid; and only the amount by which itemized deductions exceed the standard deduction. Because that last component nets the standard deduction out, a joint filer with itemized deductions below the $32,200 standard deduction contributes nothing from it.

The 2026 standard deduction figures the worksheet nets against are $32,200 for married filing jointly or a qualifying surviving spouse, $24,150 for head of household, and $16,100 for single or married filing separately. The worksheet also applies the itemized-deduction limitation and, for filers taking the standard deduction, allows a separate line for cash gifts to charity.

Self-employment income belongs to neither line. Form W-4 notes that you generally owe both income tax and self-employment tax on self-employment income received separately from wages, and directs anyone who wants to pay those taxes through payroll withholding to the estimator at irs.gov/W4App to work out the amount.

Privacy has a designed alternative. The form states that if you have concerns about providing the information Step 4(a) asks for, you may instead enter an additional amount you want withheld per pay period on Step 4(c). The employer then sees a flat dollar figure with no indication of where the other income came from.