Rosa expects to receive a $500 tax credit on her 2023 tax return. To avoid a large tax refund, she should complete Steps 2 and 3 on her 2023 Form W-4 and enter the $500 credit as a negative amount in Step 4(a) to reduce her taxable income, which will apply the credit similarly to her paychecks.

1. Rosa anticipates receiving a $500 credit for other dependents on her 2023 tax return. If she is not
looking for a huge tax refund, how should Rosa treat the credit when completing her 2023 Form
W-4, Employee's Withholding Certificate?
Rosa should:
Complete Step 2, Multiple Jobs or Spouse Works, on her 2023 Form W-4 and use the Multiple
Jobs Worksheet to calculate her adjustment.
Complete Step 3, Claim Dependent and Other Credits, on her 2023 Form W-4.
Use Step 4, Other Adjustments, on the 2023 Form W-4. She should enter the $500 of anticipated
credit as a deduction in Step 4(b).
Use Step 4, Other Adjustments, on the 2023 Form W-4 and enter the credit as a negative amount
in Step 4(a), Other Income (not from jobs). Reducing her taxable income in this way will be
virtually the same as applying the credit to her income.