Avoid a surprise at tax time and check your withholding amount. Too little can lead to a tax bill or penalty. Too much can mean you won’t have use of the money until you receive a tax refund.
You can use resources to help determine your proper W-2 withholding allowances. You should review your current W-4. After reviewing you can visit the IRS.gov website and use their W-4 calculator.
Tax Withholding for Individuals
The federal income tax is a pay-as-you-go tax. You pay the tax as you earn or receive income during the year.
When to Check Your Withholding
- Early in the year
- When the tax law changes
- When you have life changes:
- Lifestyle - Marriage, divorce, birth or adoption of a child, home purchase, retirement, filing chapter 11 bankruptcy
- Wage income - You or your spouse start or stop working or start or stop a second job
- Taxable income not subject to withholding - Interest income, dividends, capital gains, self employment income, IRA (including certain Roth IRA) distributions
- Adjustments to income - IRA deduction, student loan interest deduction, alimony expense
- Itemized deductions or tax credits - Medical expenses, taxes, interest expense, gifts to charity, dependent care expenses, education credit, child tax credit, earned income credit
Change Your Withholding
To change your tax withholding, use the results from the Withholding Calculator to determine if you should:
- Complete a new Form W-4, Employee’s Withholding Allowance Certificate, and submit it to your employer.
- Complete a new Form W-4P, Withholding Certificate for Pension or Annuity Payments, and submit it to your payer
- Make an additional or estimated tax payment to the IRS before the end of the year