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See if this feels familiar: You were excited for this year’s tax refund, but now that you’ve used it, the next one feels a very long way off. Or, you just swallowed a nasty tax bill that’s going to take you months to recover from. If you can relate to either of these scenarios, it’s probably time to update your tax withholding. A big refund typically means that you’re significantly overpaying the IRS throughout the year, and a big bill means that you should have been paying more. Updating your IRS Form W-4 with your employer can correct for either, raising or lowering your paychecks accordingly. (If you’re wondering why in the world you’d want to give up a tax refund, read this.) But taxes are such a black box that it can be hard to know what to change. That’s where the IRS’s Tax Withholding Estimator comes in. By filling in some basic pay stub information, this online tool will not only estimate how much you would owe or get back if you don’t change anything for the rest of the year, but will also fill out a new W-4 with recommended figures for eliminating any bill or refund. (Don’t worry, it doesn’t ask for your name or record the information you input.) Now, if you want to tinker with the amounts the tool spits out, then it gets a bit trickier. But in short, increasing Line 3 on your W-4 will reduce the amount of tax withheld and increasing Line 4(c) will increase it. (Pro tip: If you want your take-home pay to be bigger, increase the amount on Line 3. It looks like it’s just for people who claim dependents or other credits, but it’s not.) So what? Your W-4 is a powerful form. Adjusting it now can potentially put more money in your pocket or help you avoid having to catch up later in the year. And even if your most recent tax return was spot on, it’s worth running the withholding estimator at least once a year. (Or whenever you get a second job, buy a house, or have another big life change like a marriage or divorce.)Related Reading
• When Should I Adjust My W-4 Withholdings? (Jackson Hewitt)
• W-4 Form: How to Fill One Out in 2025 (Nerdwallet)
• Why Your Tax Refund Is Nothing to Celebrate (Tax Foundation)
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