If you have too much money withheld from your paycheck, you could end up with a big refund from the IRS, meaning you have been giving the government an interest-free loan for the past 12 months. But if you fail to have enough taken out, you could be subject to additional taxes when you file your 1040 form. If you expect to owe taxes this year, you can increase the amount of withholding from your paycheck to even things out.
If you need to have additional taxes withheld from your paycheck, obtain a new W-4 form from your employer or human resources representative. If you have online access to your pay stubs and W-2 forms, you might be able to download a W-4 from the company website. Once you have the W-4 form, follow the instructions to update and submit it to your employer.
Lower Your Allowances
If you want more money withheld from your paycheck, you need to reduce the number of allowances claimed on your W-4. You can claim an allowance for yourself, and one for any dependents claimed on your tax return. However, claiming those allowances lowers your withholding, and that could leave you owing additional tax if you have other sources of income. Reducing the number of allowances you claim on your W-4 raises the amount of tax withheld from your paycheck, thereby reducing or eliminating any additional tax liability. You can use the worksheet included with the W-4 to figure the correct number of allowances, then transfer that figure to line No. 5 of the form.
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If you have a large amount of additional income from self-employment, interest or other sources, simply lowering the number of allowances might not provide the total tax withholding you need. If necessary, you can request your company to withhold an additional amount of money from each paycheck. Simply enter the amount on line No. 6 of the W-4 form and submit it to your employer for processing.
Monitor Your Paychecks
It may take a few pay periods after you submit your W-4 before the additional withholding amounts kick in. After you submit your W-4 to human resources, monitor your paycheck carefully to assure the additional withholding takes effect. If you do not see a change after two or three pay periods, contact your human resources representative for an update on your new W-4.