When Should You Adjust Your W-4 Withholdings?
In accordance with the U.S. tax system, most individuals take the pay-as-you-earn (PAYE) approach.
Estimated income tax is paid throughout the year and then accounted for on tax day of the following year. Employers are legally required by the federal government to withhold part of their employees' income for taxes by deducting a portion of their regular salary from their paychecks.
To calculate the precise amount they withhold, employers rely on the information all new employees provide on Form W-4. If too much tax is withheld, employees receive refunds.
Major life changes may impact the amount of income you should withhold for taxes.