How to Avoid Having Too Little Tax Withheld

No one likes to owe the government money at tax time, but it's especially vexing if you find out that simply filling out your W-4 form appropriately could have fixed the problem. Medicare and Social Security taxes are based on flat percentages of your gross pay, so you'll always be able to figure out what you owe on them. Federal income tax-withholding is not as easy to figure since it depends on multiple factors. Specifically, your employer withholds taxes based on your W-4 data and the Internal Revenue Service's Circular E’s tax-withholding table that corresponds with the W-4. If your W-4 information is off target, your employer could be taking out less than the IRS expects.

Items you will need

  • W-4 Form
  • IRS Withholding Calculator

Read lines A through G of the personal allowances section of the W-4 to determine those that apply to you. For example, line B has an income cap. You can't claim an allowance on that line if you are married and your spouse works, or your income from your second job, your spouse’s earnings, or a combination of both exceed $1,500.

Claim the allowances that you qualify for, but be careful about claiming dependents. For example, if you recently welcomed a baby to the family, you can claim the child as a dependent. However, you cannot claim a child as a dependent simply because he is related to either of you. The child must meet the relationship, age, support and residence tests of the IRS to qualify. If you claim too many dependents, you will have more money in your checks through the year, but you will pay for it a tax time.

Add the total number of allowances from lines A through G and put the total on line H.

Complete the Two Earners/Multiple Jobs worksheet on the second page of the W-4 if you and your spouse are both employed and your combined wages exceed $10,000 (as of 2012). Transfer the number of allowances from line H to line 1 of the two earners worksheet. On line 2, write the number of allowances based on annual wages for the lower-paid spouse or if married filing jointly. Depending on the result, enter the result of lines 1 and 2 on line 3. Stop there, or continue to line 9. In the latter case, state the additional amount to be withheld from each of your paychecks.

Fill out the Employee’s Withholding Allowance Certificate section of the W-4. Include your filing status on line 3, number of allowances on line 5, and, if applicable, transfer the additional amount to be withheld from line 9 of page 2 to line 6.

Sign and date the withholding certificate. Return it to your employer so it happens in the time frame that you want the change to occur. Keep the remaining paperwork for your records.


  • You may use the IRS withholding calculator for the respective year to determine if you need to submit a new W-4 to your employer. The calculator factors your filing status, credits, income and withholding to help guide you through the form.

About the Author

Grace Ferguson has been writing professionally since 2009. With 10 years of experience in employee benefits and payroll administration, Ferguson has written extensively on topics relating to employment and finance. A research writer as well, she has been published in The Sage Encyclopedia and Mission Bell Media.