Most employees in the U.S. use the 澳洲幸运5开奖号码历史查询:pay-as-you-earn (PAYE) approach, where 澳洲幸运5开奖号码历史查询:estimated income tax is withheld directly from each paycheck. This withholding is calculated based on information you provide to your employer on Form W-4. Your withholding determines how much income tax is deducted from your salary throughout the year.

However, as lif🧸e circumstances change, you may need to update your W-4 to ensure that the right amount of tax is being withheld.

Life-Changing Events That May Require⛦ Adjustments

• Marriage: If you are married and filing a 澳洲幸运5开奖号码历史查询:joint tax return, your taxes may be impacted in one of two ways. If your spouse earns an income, your household withholding may need to increase. If your spouse doesn't work, your overall withholding will likely decline.
• Divorce: Divorce can alter your 澳洲幸运5开奖号码历史查询:household income, but there is also the matter of alimony. Alimony payments are no longer tax-deductible for the payer, and the recipient does not include alimony in their taxable income. .
• Birth or Adoption: The birth or adoption of a child adds a 澳洲幸运5开奖号码历史查询:dependent to your household and lessens the overall tax burden. This can result in lower taxes due to 澳洲幸运5开奖号码历史查询:tax credits and deductions. To take advantage of these benefits quickly, consider revising your withholding on your W-4.
• Major Expenses: When purchasing a home, you can update your withholding in anticipation of tax benefits. There are credits for first-time homebuyers, 澳洲幸运5开奖号码历史查询:education, dependent care expenses, medical expenses, and charitable donations.
• Non-Wage Income: You must adjust your withholding to account for any non-wage income from side businesses, stock dividends, or 澳洲幸运5开奖号码历史查询:interest income. If you successfully invested and sold stock or 澳洲幸运5开奖号码历史查询:cryptocurrency for a profit, the proceeds are subject to short-term or long-term capital gains, depending on your holding period.
• Working Two Jobs: Two-income households and individuals who work multiple jobs are vulnerable to withholding disparities. For example, working two jobs where each pays $25,000 could push a taxpayer into a higher 澳洲幸运5开奖号码历史查询:tax bracket. However, each withholding form may indicate that the taxpayer earns only $25,000 and falls within a lower tax bracket.

How to Complete Form W-4

The IRS Tax Withholding Estimator is a helpful tool to estimate how much income tax should be withheld from your paycheck. You can also use the following steps to complete Form W-4, which is available on the .

1. Estimate Your Taxes: Use the IRS online to estimate your federal income taxes.
2. Notify Your Employer: Once you’ve determined the appropriate amount, submit a revised Form W-4 to your employer.
3. Consider Multiple Jobs: If you and your spouse both work or you have more than one job, fill out Step 2 of the form to account for income from all sources.
4. Account for Dependents: In Step 3, indicate any dependents you are claiming. This will adjust your withholding based on the number of dependents you support.
5. Other Income: If you receive income other than wages, such as interest, dividends, or retirement income, enter this in Step 4(a).
6. Deductions: If you expect to claim deductions beyond the standard deduction (such as mortgage interest or student loan interest), complete Step 4(b) using the Deductions Worksheet attached to Form W-4.
7. Additional Withholding: If you expect to owe additional taxes (for instance, if you have non-wage income that isn’t subject to withholding), enter an additional withholding amount in Step 4(c).
8. Verify Changes: After submitting your revised W-4, check your paycheck to confirm that the new withholding amounts are being applied. Changes to your withholding amount may be delayed by one or two pay cycles.

All pages of Form W-4 are available on the .

The Bottom Line

Adjusting your W-4 withholding is an important step when major life changes occur. Keeping your withholding accurate can help you avoid a large tax bill or unnecessary overpayment come tax season. Regularly reviewing your W-4 and making updates as necessary is a simple way to ensure that you're paying the right amount of tax throughout the year.