If you received a bigger refund or owe more than expected on your recent tax return, it might be time to check your withholding from your paycheck. The amount your employer withholds from your paycheck depends on the amount you earn and the information you give your employer on Form W-4.

It is important to complete a new W-4 form when you have any life changes such as divorce, marriage, a second job, home purchase, or adding a dependent. You should review your withholdings yearly to avoid a large tax bill or refund.

Steps to Complete Form W-4

Step 1: Enter Your Personal Information

Be sure that it matches what appears on your social security card.

Step 2: Account for Multiple Jobs or Spouse Works

If you hold two jobs or both you and your spouse work, check this box and make sure your spouse checks the box too. This will ensure the proper amount is withheld from your paychecks.

Step 3: Claim Dependents

The total number of dependents you claim also has a significant effect on your total withholdings. If your total income is under $200,000 or (400,000 or less if filing jointly) you can enter how many dependents you have and multiply them by the credit amount. Note: if married filing jointly only one of you should claim the dependent(s). If you both claim your dependents, your withholding will be too low causing you to owe when you file your tax return.

Step 4: Other Adjustments

This may be other income such as net self-employment income, partnership income subject to self-employment tax, and investment income – interest, dividends, capital gains, royalty, and rental income.

If you itemize your deductions on your tax return – mortgage interest, charitable deductions, and state and local taxes (up to $10,000) and medical expenses more than 7.5% of your income, use the worksheet on Page 3, Step 4(b). Again, only one spouse if married and filing jointly should claim this adjustment.

You can also opt to have extra withholding taken from your pay each payroll period by entering a dollar amount to withhold from each paycheck in 4 (c).

Step 5: Sign and Date

When the form is completed, give it to your employer’s human resources department.

IRS Tax Withholding Estimator

If you are still unsure, the IRS provides taxpayers with a free Tax Withholding Estimator on IRS.gov. [https://apps.irs.gov/app/tax-withholding-estimator] The estimator shows how your current withholdings affect your take-home pay, your tax bill, or refund. You will need all your most recent pay stubs, other income sources (side jobs, self-employment, and investments), and most recent tax return to complete the estimator.

Claiming the right amount of deductions is important so that you can have as much money in hand throughout the year without owing too much when you file your tax return.