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.
 

Use the Tax Withholding Estimator

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:

Understand tax withholding

  • Your regular pay, commissions and vacation pay.
  • Reimbursements and other expense allowances paid under a non-accountable plan.
  • Pensions, bonuses, commissions, gambling winnings and certain other income.  

It depends on:

Note: You must specify a filing status on the Form W-4 and complete other parts of the form if you expect to have additional income, deductions beyond the standard deduction, or tax credits. You cannot specify only a dollar amount for your employer to withhold.