Tax withholding for individuals

The federal income tax is a pay-as-you-go tax. You pay the tax as you earn or receive income during the year.

What is tax withholding?

If you're an employee, your employer probably withholds income tax from your paycheck and pays it to the IRS in your name.

What is estimated tax?

If you don’t pay your taxes through withholding, or don’t pay enough tax that way, you may have to pay estimated tax. People who are self-employed generally pay their tax this way.

Check your withholding

Avoid a surprise at tax time and check your withholding amount. Too little can lead to a tax bill or penalty. Too much can mean you won’t have use of the money until you receive a tax refund.

When to check your withholding:

• Early in the year
• When the tax law changes
• When you have life changes:
  • Lifestyle - Marriage, divorce, birth or adoption of a child, home purchase, retirement, filing chapter 11 bankruptcy
  • Wage income - You or your spouse start or stop working or start or stop a second job
  • Taxable income not subject to withholding - Interest income, dividends, capital gains, self employment income, IRA (including certain Roth IRA) distributions
  • Adjustments to income - IRA deduction, student loan interest deduction, alimony expense
  • Itemized deductions or tax credits - Medical expenses, taxes, interest expense, gifts to charity, dependent care expenses, education credit, child tax credit, earned income credit

  Change your withholding

  Note: You may use the results from the Tax Withholding Estimator. To change your tax withholding you should:

  • Complete a new Form W-4, Employee’s Withholding Allowance Certificate, and submit it to your employer.
  • Complete a new Form W-4P, Withholding Certificate for Pension or Annuity Payments, and submit it to your payer
  • Make an additional or estimated tax payment to the IRS before the end of the year