Can I adjust my W-4 at any time during the year?
Yes. But the earlier in the year you update your W-4, the more time it allows for the changes to take effect.
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How to adjust your tax withholdings for a larger paycheck
Keep more of your money throughout the year by aiming for a $0 tax refund from the IRS.
Getting a $0 tax refund is the sweet spot between an unexpected tax bill and a huge tax refund that might have served you better in a simple savings account. Find out how and when you should change your tax withholding so you can find that perfect balance.
What is tax withholding?
Tax withholding is the amount of money your employer withholds from your paycheck and pays directly to the IRS in your name. The withholding tax is a credit toward the income taxes you must pay throughout the year.
When you file your taxes, you’ll find out exactly how much income tax you should’ve paid. If you’ve overpaid, you’ll get a tax refund. But if you didn’t pay enough, you’ll get a tax bill for the amount you owe.
How your W-4 determines how much is withheld
The W-4 IRS form tells your employer how much money to withhold. The W-4 forms before 2020 were based on allowances — the more you claimed, the less your employer would withhold, and the fewer allowance you had, the more your employer would withhold.
Starting in 2020, the W-4 forms no longer use allowances. The new forms use three sections to determine how much is withheld:
- Multiple jobs, including your spouse if filing jointly
- Dependents
- Other adjustments, including other sources of income and deductions
You can be exempt from tax withholding if you didn’t pay any federal income taxes last year and you don’t think you’ll owe any this year.
When should I adjust my tax withholdings?
You’ll need to complete a new Form W-4 if you’re starting a new job. For everyone else, you might want to adjust your tax withholdings when you:
- Want a larger paycheck instead of a tax refund.
- Get married, divorced or become widowed.
- Have a baby or adopt one.
- Have a child turning 17.
- Buy a new home.
- Drastically change your income, including collecting unemployment or getting a new job.
- Pay off student loans.
What documents do I need before getting started?
Only fill out the sections of the W-4 form that apply to your situation. For example, if you’re single with one job, no dependents and you aren’t claiming any tax credits or itemized deductions, you’ll probably only complete steps one and five.
For more complex tax situations, you’ll need the following information and documents to change your tax withholdings:
- Social Security number
- Most recent pay stubs, including if you and your spouse have multiple jobs
- Most recent income tax return
- Estimated income for the current year
- Other income, including interest, dividends and retirement income
- List of itemized deductions
How to adjust your tax withholdings in 9 steps
Here’s a step-by-step guide on how to change your tax withholdings:
Step 1: Go to the IRS website and navigate to their tax withholding estimator.
The IRS has a handy tax withholding estimator tool to help you calculate how much tax to withhold from each paycheck.
Step 2: Complete the About You section.
Answer five questions about yourself, including:
- Filing status, such as single, head of household or married filing jointly.
- Number of dependents.
- Number of jobs you (and your spouse) hold.
- Whether you (or your spouse) will receive income from a pension this year.
- Other sources of income and tax payments.
Step 3: Complete the Income & Withholding section.
Enter your income and withholding for each job that you and your spouse have. It’ll also ask how much you have contributed to a tax-deferred retirement plan, including 401(k)s, and any other pre-tax accounts, such as flexible spending accounts.
Step 4: Complete the Adjustments section.
Input any adjustments you qualify for, which may reduce your taxable income. For example, you might enter a student loan interest deduction or alimony payments. Choose the question mark icon for an explanation of each adjustment.
Step 5: Complete the Deductions section.
Choose whether to take the standard deduction or if you want to itemize your deductions. If you’re unsure, input your itemized deduction, and the IRS calculator will let you know which one is higher.
Step 6: Complete the Tax Credits section.
Select any tax credits you’re eligible for, including homeowners who have a Mortgage Interest Credit or parents who qualify for a child tax credit.
Step 7: Review your results.
Your results show you what may happen if you don’t change your withholding. Use the slider to pick how much of a tax refund you’d like and follow the steps after to adjust your tax withholding.
Step 8: Fill out a new W-4 or W-4P form.
Follow the instructions under How to Adjust Your Withholding to fill out the W-4 or W-4P to change your tax withholding and achieve your refund goal.
Step 9: Submit the form to your employer.
Give the new W-4 form to your boss. The W-4P form goes to the company in charge of your pension or annuity. These tax forms don’t go to the IRS.
How long will it take to see the changes in my paycheck?
You’ll generally see your W-4 changes within a month after you submit your form. Some employers may process and apply your withholdings changes even earlier.
Get professional help with your taxes online
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Bottom line
Adjusting your tax withholdings so that it’s more accurate means more money for you now to spend or invest. Check out our comprehensive guide for more information about how to file your taxes.
Frequently asked questions
Find answers to even more of your tax-withholding questions here.
What’s the difference between a W-4 and a W-2?
You submit a W-4 form to your employer to tell them how much tax to withhold from your paycheck. You receive a W-2 form from your employer summarizing your annual income and taxes for the year.
I’m an independent contractor. What happens to my tax withholdings?
Independent contractors get Form 1099-MISC instead of a W-2. No federal taxes are withheld from your pay.
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Does the IRS Tax Withholding Estimator include the FICA and Medicare taxes?
No, although the calculator includes the additional Medicare tax that some people with high incomes pay, the estimator and W-4 form do not address the FICA or Medicare taxes.
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