When Did You Last Fill Out a W-4?
Time to Check Your Withholding
When you started your job, you probably completed Form W-4 and handed it to your employer. When was that?
More importantly, what has changed since then?
Maybe you got married or divorced. Perhaps you had a child, bought a house, started a second job, began doing gig work, or your spouse went back to work. Your income may have increased substantially. Tax law itself may also have changed.
Your withholding may not have kept up.
Too Much Withholding Is Not Necessarily a Good Thing
A large tax refund can feel good, but it may also mean you had substantially more federal income tax withheld from your paychecks than necessary.
That money was unavailable to you throughout the year. Adjusting withholding could potentially put more of it into each paycheck instead.
The IRS notes that when too much tax is withheld, you lose the use of that money until you receive your refund.
Too Little Withholding Can Be Worse
The opposite problem can produce an unpleasant surprise.
If too little federal income tax is withheld during the year, you could owe a significant balance when you file your return. In some circumstances, insufficient tax payments during the year can also result in an underpayment penalty.
The goal generally should not be the biggest possible refund or the smallest possible paycheck withholding. The goal is to have withholding reasonably match your expected tax liability.
Life Changes Are a Good Reason to Check
The IRS recommends reviewing withholding after major life and financial changes. These can include:
- Marriage, divorce, or separation
- Birth or adoption of a child
- Buying a home
- Starting or leaving a job
- A spouse starting or leaving a job
- Taking on a second job
- Starting self-employment or gig work
- Significant changes in income, deductions, or tax credits
- Changes in tax law
Gig and self-employment income deserves special attention. A Form W-4 controls withholding from wages, but someone earning additional income from rideshare driving, delivery work, consulting, freelancing, rental activity, or another business may also need to consider estimated tax payments.
The IRS Has a Tool to Help
The IRS Tax Withholding Estimator can help taxpayers project their federal income tax liability and expected withholding based on the information they enter. The results can help an employee decide whether a new Form W-4 may be appropriate.
For 2026, the IRS updated the estimator to reflect recent tax law changes, including provisions that may affect tips, overtime, car-loan interest, seniors, family credits, homeownership, and charitable giving.
The IRS says using the estimator takes about 25 minutes on average, although a simpler tax situation may take less time.
There Is Still Time to Make an Adjustment
If you discover that your withholding is substantially too high or too low, you do not necessarily have to wait until next year to address it. There are still several months left in 2026, and a new Form W-4 can change withholding for the remaining pay periods.
Your Form W-4 is not necessarily something you should fill out once and forget. Your life changes. Your income changes. Tax laws change. Your withholding should be reviewed too.
A Practical Tax Planning Checkup
Reviewing withholding can be a simple but valuable part of tax planning. The objective is not to engineer a particular refund. It is to reduce the chance of a large unexpected balance due while avoiding unnecessary overwithholding.
The IRS Tax Withholding Estimator is available at IRS.gov. Before using it, it can be helpful to have recent pay stubs for yourself and your spouse, information about other income, and your most recent federal income tax return available.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.