Should your W-4 Withholdings be adjusted?

Most individuals in the US tax system participate in the PAYE program, or pay-as-you-earn. This estimates your income tax throughout the year based on your regular paycheck. Employers are legally required by the federal government to withhold a portion of their employees’ paycheck for tax purposes. 

To be able to predict the proper withholding amount, employers rely on the employee to fill out their W-4 Forms properly. 

Although you filled out the form to the best of your ability when you were hired, a lot can change in a year. If you have had some big changes, it might make sense to update your form and revise the amount of taxes that is being withheld. 

Life Events That Require Withholding Changes

There are several life events that will require you to change your required withholdings. Some of them include the following:


When you get married, that is a good time to adjust your withholdings. Your taxes will be impacted in a few ways. Most married couples will choose to file a joint tax return because of the added benefits of doing so. 

If both spouses earn an income, your overall household withholding may increase. If your spouse does NOT work, the overall household withholding may decline. 

In certain circumstances, it makes sense to file separately, but that of course depends on the couple. You will need to make sure that filing separately is the best decision before agreeing to do so. You may lose money doing that, or you may gain it. It is all very individualized. 


Divorce alters your life in many ways, and that includes your household income. That will definitely we adjusted as you move to a single-income household. 

Something you have to consider as well is alimony. Alimony is when one spouse is ordered by the court to pay another spouse each month for financial support. Starting in 2019, alimony payments will not be tax-deductible for the payer, and the receiver does not have to declare alimony as an income. 

Birth or Adoption

When a child is added to the family, that immediately adds a dependent to the household. This lessens the tax burden on your family, to acknowledge the costs of raising children. 

When you have children, you will pay less in taxes each year until your children are grown up and are no longer a dependent. 

When they are no longer a dependent, you will have to adjust your withholdings and will pay more in taxes. 

New Home (or Other Major Purchases)

Purchasing a new home will usually update your withholding because of various tax benefits for homeowners. There are many tax benefits home owners and first-time homebuyers receive. The IRS has a list of the approved benefits but they do change it regularly so that is something you will need to keep in mind. 

Large deductions are also possible for education credits, medical expenses, charitable donations, and dependent care expenses. 

Big Increases in Non-Wage Income

If you earn money from side businesses, interest, or stock dividends, you will have to adjust your withholding to account for that. The income you earn from those activities must be disclosed to the IRS for proper reporting on your income. 

Working Two Jobs

If you work two jobs or have a two-income household, your will have a larger income to report which equals more money to withhold for taxes. If you lose one of the jobs, you can adjust your withholding and end up paying less in your taxes overall. 

How do you know if your W4 withholdings should be adjusted?

It may be hard to know if you should adjust your tax withholdings. There is obviously a lot to taxes, and individuals are not expected to understand how to do all of this on your own. That is why we have Tax Experts at Tax Network USA to help you with all of your tax needs. 

If you have questions about your taxes or how you should adjust your tax withholding due to various life changes discusses above, you have found the right team to help you!

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About The Author


Senior Tax Analyst at Tax Network USA

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