Tax season is over—or is it? While filing your taxes might be behind you, now is actually the perfect time to make smart moves that can save you money for next year. One of the most effective (and often overlooked) strategies is adjusting your withholding.
Whether you ended up owing more than expected or got a refund that felt a bit too big, fine-tuning your withholding can help keep more money in your pocket throughout the year and reduce surprises come April.
Here’s how to do it the smart way:
1. Understand What Withholding Is (and Why It Matters)
Withholding is the amount your employer deducts from your paycheck for taxes. Ideally, your withholding should match your actual tax liability. If you withhold too much, you’re giving the government an interest-free loan. Too little? You could face a tax bill—and maybe even a penalty.
The goal is to get your withholding as close as possible to what you’ll actually owe.
2. Revisit Your W-4
If it’s been a while since you’ve looked at your W-4 form, now’s the time. The IRS redesigned the W-4 a few years ago, making it more accurate and easier to update. It takes into account factors like:
- Multiple jobs
- Spouses who also work
- Dependents
- Itemized deductions or tax credits
Use the IRS Tax Withholding Estimator to get an idea of what you should be entering on your W-4. Based on the results, you can submit an updated W-4 to your employer to adjust your withholding.
3. Life Changes? Time to Recalculate
Major life events—like getting married, having a baby, or buying a home—can significantly affect your tax situation. If you’ve experienced any of these, your withholding might need a fresh look.
Even changes in income, like getting a raise or starting a side hustle, should trigger a review of your withholding strategy.
4. Track Side Income and Gig Work
If you’re freelancing, driving for rideshare apps, or running a small business, withholding doesn’t automatically happen. You may need to make estimated tax payments or increase withholding at your main job to cover that income.
A business tax accountant near me can help you navigate these situations and ensure you’re setting aside enough for taxes throughout the year.
5. Consult a Pro—It’s Worth It
Online calculators are helpful, but nothing beats a personalized review. A qualified tax professional can analyze your entire financial picture and help you adjust your withholding properly. This is especially useful if you have a more complex return or if you’re self-employed.
Search for a business tax accountant near me and schedule a mid-year check-in. You might be surprised at how much of a difference a quick consultation can make.
Final Thoughts
Adjusting your withholding is one of those smart money moves that can make a big impact without a lot of effort. By reviewing your W-4, understanding your tax picture, and staying on top of income changes, you’ll set yourself up for a smoother (and potentially cheaper) tax season next year.
Want to make sure you’re doing it right? Reach out to a local tax professional who knows the ins and outs of business and personal taxes. You don’t have to figure it all out alone—and your future self will thank you.
