Julie anticipates receiving a $500 credit for other dependents on her 2021 tax return. If she is not looking for a huge tax refund, how should Julie treat the credit when completing her 2021 Form W-4?

Julie anticipates receiving a $500 credit for other dependents on her 2021 tax return. If she is not looking for a huge tax refund, how should Julie treat the credit when completing her 2021 Form W-4?

Julie should complete Step 2 on her 2021 Form W-4 and use the Multiple Jobs Worksheet to calculate her adjustment.

Julie should complete Step 3 of her 2021 Form W-4.

Julie should use Step 4, Other Adjustments, on the 2021 Form W-4. She should enter the $500 of anticipated credit as a deduction on line 4b.

Julie should use Step 4, Other Adjustments, on the 2021 Form W-4 and enter the credit as a negative amount on line 4a, Other Income (not from jobs). Reducing her taxable income in this way will be virtually the same as applying the credit to her income.