At JA Green, we want to help our clients avoid surprises at tax time—and one of the biggest issues we saw this year was under-withholding on paychecks.
Many clients were shocked to find out they owed money when they filed their returns, and in most cases, the cause was simple: their W-4 forms weren’t filled out correctly. Let’s talk about why the W-4 is so important, what went wrong for many people this year, and how you can avoid it in the future.
What is a W-4 Form?
The W-4 form tells your employer how much federal income tax to withhold from your paycheck. If too little tax is withheld, you could end up owing money when you file your tax return. If too much is withheld, you’ll get a refund—but it might mean you had less money available throughout the year. Getting it “just right” helps you manage your cash flow and avoid surprises.
Common Mistakes We Saw This Year
This tax season, a common trend we noticed was clients not accurately accounting for their full household income on their W-4s. Some of the most common mistakes included:
- Filing Married Filing Jointly (MFJ) but not accounting for both spouses’ incomes. If you’re married and both you and your spouse earn income, the W-4 instructions recommend factoring in both salaries. Skipping this step can result in much lower withholding than necessary.
- Not including income from second jobs. Whether it’s a side hustle or a part-time gig, additional income needs to be considered
on your W-4. Otherwise, you could owe much more than expected at tax time. - Relying on outdated assumptions. Some people assume that once a W-4 is filed, it doesn’t need to be updated. But if you’ve changed jobs, gotten married, added a second job, or experienced other life changes, it’s essential to update your W-4.
How to Fill Out Your W-4 the Right Way
- Use the IRS Tax Withholding Estimator.
The IRS offers an easy-to-use online tool to help you estimate the right amount of withholding. - Be thorough and honest about all income sources.
Include income from your spouse, second jobs, side businesses, and any freelance work. - Review and update your W-4 regularly.
A good rule of thumb is to check it at least once a year or after any major life change. - Ask for help if needed.
Filling out a W-4 can feel confusing, especially with multiple income streams. Don’t hesitate to reach out to a tax professional—we’re happy to guide you through it!
Making sure your W-4 is filled out accurately can save you a lot of stress (and money) at tax time. If you’re unsure whether your current withholding is correct, now is the perfect time to take a closer look.
Need help?
At JA Green, we’re here to make tax time easier. Contact us today if you’d like help reviewing your W-4 or adjusting your withholding strategy!
