Here’s How To Adjust Your Paycheck’s Tax Withholding Without Harming Take-Home Pay
Written by
Adam Palasciano
Edited by
Zuri Anderson
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Taxes are just a part of life, we all have to pay them. If you work, whether part-time, full-time or as a contractor, it doesn’t make a difference: You’re going to have to pay up. It’s only February, but the Apr. 15 deadline to file your 2024 tax return is fast approaching.
Let’s face it: Nobody wants to owe more money in tax bills than is necessary. However, most Americans usually see a sizable tax refund every year, which means they’re likely overpaying their taxes throughout the year.
According to the Int IRS, the average tax refund amount for last year’s tax season (calculated as of the end of December 2024) was $3,138. While it may seem exciting to get a nice fat check once a year, a tax refund simply means you gave Uncle Sam an interest-free loan for a whole year — money that would have better served you in your paychecks.
You may feel hesitant about adjusting your withholdings, but by doing so, you might actually end up with more of your hard-earned money rather than less. Here are two ways to adjust your paycheck’s withholding without harming your take-home pay, according to Intuit TurboTax and the IRS.
Check Your Current Tax Withholdings
First, it’s important to check your current tax withholdings to make sure you have sufficient take-home pay throughout the year, instead of waiting for a tax refund when you file.
Withholding too little can mean you’ll be responsible for a big tax bill when it’s time to file your return. On the other hand, withholding too much can mean that you unnecessarily overpay your taxes and get stuck with less money in your pocket. Making minor adjustments may improve your take-home pay rather than harm it.
Take Advantage of the IRS Tax Withholding Estimator
If you’re unsure of how much you should modify your tax withholdings (or if they need to be modified at all), the IRS offers a very useful tool to make sure you’re withholding the proper amount of money from every paycheck: the Tax Withholding Estimator.
This handy tool can help you estimate your proper federal income tax withholding and visualize how your tax refund, take-home pay or tax bill owed may be affected by your withholding amount. All you’ll need to get started is your most recent year’s tax return and pay stubs from all of your jobs (including income earned from self-employment, side gigs and investments).
By determining your proper withholdings, you may increase your take-home pay all year long and stop waiting for a refund check just once a year.
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