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Why Should I Review My Current W-4 Paycheck Withholding?

“adjust your paycheck withholding

At efile.com, we broke down everything you wanted to know about the W-4 form into the following pages:

  1. What is a W-4 Form?
  2. Why do I need to fill out a Form W-4? (this page)
  3. How do I adjust my paycheck withholding with a W-4?
  4. Free W-4 Taxometer

Did you know that most taxpayers do not realize that the tax withheld from each and every pay check is their own money? If you get a tax refund when you file your tax return, you are allowing too much money to be withheld from your paycheck. Do not let this happen-it is your money!

How Do I Control My Tax Withholding and Get More Of My Paycheck Money? 

Adjust the amount of allowances (withholding exemptions) you claim on your W-4 form. If you do not know how many allowances to claim on your W-4 form, consider this:

Increase Your Paycheck=Withhold Less Taxes with More Allowances

Decrease Your Paycheck=Withhold More Taxes with Less Allowances

Our guide below provides information on why and how to review the current money you withhold from your paycheck for tax purposes.

Why Would I Want to Adjust My Paycheck Withholding and Update My Allowances?

It depends on how much money you want in your paycheck, as well as what you want to happen after you file your tax return by Tax Day. Ask yourself the questions below and select the answer that best fits your tax situation. Then, find out how you can adjust your withholding based on your answer!

Question Answer How Tax Tip
Do you want to give too much of your paycheck money to the IRS/state, only to get it back again after you file your tax return? Yes, I want to get a tax refund. Enter "0" in the allowances field so the maximum amount of tax is withheld from your paycheck. Remember that a refund is like an interest-free loan to the government. If you want more of your money now and not wait for a refund, you may want to consider entering at least one (1) allowance on your W-4 form.
Do you want to give just enough of your paycheck money to the IRS/state so you do not get a refund and you do not owe any taxes when you file a tax return? Yes, I do not want to get a tax refund and I do not want to owe any taxes. Enter "1" or more in the allowance field, but just enough allowances so your withholding is balanced. If your current tax withholding is too low and your tax situation requires you to have additional money taken from your paycheck, you can withhold more tax so your withholding is more balanced. See our section on withholding more taxes to fit your tax situation for details.
Do you want to give as little as possible of your paycheck money to the IRS/state, but are ready to pay the taxes owed when you file your tax return? Yes, I want to owe taxes by next April. Enter "1" or more in the allowance field to make sure you have as much tax withheld from your paycheck as possible. If you want to owe less tax (or no tax) when you file your tax return, you may want to decrease the amount of allowances on your Form W-4.

Whatever you decide, you will need to know the answer in DOLLARS and CENTS. In order to do this, you should use the efile.com W-4 Taxometer to determine whether you want a refund, owe taxes, or be tax balanced when you file your tax return. Then, use the efile.com Tax Return Calculator to estimate your tax refund or taxes owed before preparing and filing a tax return.

How Do I Review My Current W-4 Allowances From My Own Paycheck For Tax Purposes?

Follow the steps below to review your current paycheck withholding on your W-4 form:

1 Use the efile.com Taxometer Tool to find out if you want a tax refund, owe taxes, or be tax balanced next April:

Before you start the Taxometer, you may want to have these items ready:

Start the W-4 Taxometer Now!

Tax Tip: To make sure you are having the right amount of tax withheld from your pay, you can adjust your allowances. Allowances help you determine your tax refund or taxes owed on your tax return. It can also help you determine whether or not you qualify for tax credits or deductions. To determine how many allowances to claim based on your tax situation, use this as a guide:

Increase Your Paycheck=Withhold Less Taxes with More Allowances

Decrease Your Paycheck=Withhold More Taxes with Less Allowances

2 Use different allowances on the efile.com tax calculator so you can estimate which amount of allowances applies to the result you want when you file your tax return (getting a refund, not getting a refund nor owing taxes, or owing taxes).

2010 Tax CalculatorStart Tax Return Calculator

Should I Review My Form W-4 and Withholdings When Life Changing Events Happen?

You should always review your W-4 (withholding information) to make sure the right amount of tax is withheld from your paycheck. However, the following life changing events can affect the numbers of allowances you decide to claim on your Form W-4:

  • New job
  • Pay raise
  • Marriage (or divorce)
  • Birth of a child
  • Home purchase
  • Major financial gain
  • If you have never used a withholding calculator

These are just a few examples. However, if anything in your life changes during the year that might affect your taxes, you will need to review and update your W-4 form.

If My Tax Situation Requires Me to Have More Tax Withheld from My Paycheck, How Can I Withhold More Taxes To Fit My Tax Situation?

Review your current W-4 and take the following steps to make sure that the right amount of tax is withheld from your paycheck:

  1. Allow the maximum amount of tax to be withheld from your paycheck by entering "0" in line 5.
  2. If you are married, enter "0" in line C for your spouse's tax withheld (if you already have "0" in lines A and B).
  3. If entering "0" as your allowance amount does not withhold enough taxes for your situation, report the dollar amount you want withheld from your paycheck in line 6.
  4. If you are married and following steps 1-3 does not withhold enough taxes from your paycheck, check the “Married, but withhold at higher Single rate" box.

Whatever your life situation, efile.com offers a safe, easy way to prepare and efile your taxes.