IRS Publication 919: How to Adjust Your Tax Withholding

Federal income tax is a pay-as-you-go system, requiring you to pay tax as you earn income. For most employees, this is done through payroll withholding, where your employer uses Form W-4 to determine how much tax to deduct from each paycheck. The goal is to have the amount withheld closely match your actual tax liability for the year.

IRS Publication 919, “How Do I Adjust My Tax Withholding?,” serves as a guide to help you check and adjust this amount. Properly adjusting your withholding helps you avoid a large tax bill or a large refund. While a large refund might seem nice, it means you’ve given the government an interest-free loan, so the goal is to keep more of your money with each paycheck while meeting your tax obligations.

Reasons to Adjust Your Withholding

Life events and financial changes can alter your tax situation, making it necessary to adjust your withholding. These events can affect your filing status, deductions, credits, and overall income, leading to an inaccurate amount of tax being paid if your Form W-4 isn’t updated.

Changes in your personal life often require a withholding adjustment. Marriage, for instance, changes your filing status and can move you into a different tax bracket, directly impacting your tax calculation. A divorce requires an adjustment back to a single or head of household status. The birth or adoption of a child can make you eligible for the Child Tax Credit, which can lower your tax liability and the amount you need withheld. Conversely, when a child no longer qualifies as your dependent, your withholding may need to increase.

Your employment situation is another factor. If you get a second job or your spouse starts or stops working, your household income and tax bracket will change significantly. The standard withholding on a single W-4 does not account for this additional income, requiring a specific adjustment. Receiving a substantial amount of non-wage income from sources like freelance work, investments, or retirement distributions also necessitates a review, as this income is often not subject to automatic withholding.

Changes to your tax deductions and credits can also warrant an adjustment. For example, buying a home often means you can deduct mortgage interest, lowering your taxable income. If you anticipate your itemized deductions will be greater than the standard deduction for your filing status, you can adjust your withholding to reflect this. Becoming newly eligible for tax credits, such as those for education expenses, can also reduce the amount of tax you owe.

Information and Tools for Calculating Withholding

To accurately calculate your withholding, you must first gather several pieces of financial information. Having these documents and estimates ready will streamline the process. You will need:

• Your most recent pay stubs for all jobs, and your spouse’s if filing jointly, which contain year-to-date earnings and federal tax already withheld.
• A copy of your most recent income tax return, which is a reference for income, adjustments, and deductions from the previous year.
• Estimates of any other income you expect to receive that won’t have taxes withheld, such as from interest, dividends, or self-employment.
• Information on your potential tax deductions and credits, including planned IRA contributions, student loan interest, and the number of qualifying dependents.

With this information, the IRS provides two tools to perform the calculation. The first is the online Tax Withholding Estimator, an interactive tool on the IRS website. This estimator asks a series of questions about your financial situation and uses your answers to recommend the most accurate withholding. The second tool is the set of manual worksheets that are part of the Form W-4 instructions, which guide you through a step-by-step calculation to determine the correct entries for your W-4.

Using the Form W-4 Worksheets

The most direct calculation tools are the worksheets included with the instructions for Form W-4 itself. These worksheets translate your financial data into the specific numbers required on the form. The two most common are the “Multiple Jobs Worksheet” and the “Deductions Worksheet.”

The “Multiple Jobs Worksheet” is for individuals who hold more than one job or are married filing jointly where both spouses work. This is necessary because standard withholding tables used by employers assume you only have one job, which can lead to too little tax being withheld from combined incomes. The worksheet instructs you to use the income from the highest-paying and second-highest-paying jobs to find a corresponding value in a set of tables. This value is the additional annual tax that needs to be withheld, which you then divide by your number of pay periods to find the extra amount for each paycheck.

The “Deductions Worksheet” is for those who expect to claim itemized deductions instead of the standard deduction. For 2025, consider this worksheet if your itemized deductions will exceed the standard amounts: $15,000 for single filers, $22,500 for head of household, and $30,000 for married filing jointly. This worksheet allows you to account for deductions like mortgage interest, state and local taxes up to the $10,000 limit, and charitable contributions. You will enter your estimated total for these deductions, and the worksheet has you subtract the standard deduction for your filing status to find the excess amount. This final number is what you will use on Form W-4.

Completing and Submitting Form W-4

After using the IRS Tax Withholding Estimator or the manual worksheets, the final step is to transfer this information onto a new Form W-4. This form is the official document that instructs your employer on how much federal income tax to withhold. While only Steps 1 (personal information) and 5 (signature) are required for all, Steps 2, 3, and 4 are where you will input your calculated adjustments.

The results from the worksheets are entered in specific steps on the form. The additional amount to withhold per paycheck from the “Multiple Jobs Worksheet” goes on Step 4(c). Your estimated deductions above the standard amount from the “Deductions Worksheet” go on Step 4(b). For those with qualifying children, you will complete Step 3 by multiplying the number of children under age 17 by $2,000 and the number of other dependents by $500, then entering the total.

Once you have filled out all applicable steps, you must sign and date the form in Step 5. You then submit the completed Form W-4 to your employer, typically the human resources or payroll department. Many companies have an online portal for submitting these changes electronically, while others may still require a physical paper copy. Your employer is required to implement your new withholding elections, and the change usually takes effect within one to three pay periods.

After submitting the form, it is good practice to check your first pay stub once the new withholding amount is in effect to verify that the federal income tax withheld has changed correctly. This confirmation ensures your calculations were entered into the payroll system and that you are on track to have a more accurate amount of tax withheld for the remainder of the year.