What does a W-4 actually control?
Only withholding. Your tax for the year is worked out on your return, from your income, your filing status, your deductions and your credits. The W-4 tells one employer how much to hold back against that figure in the meantime.
It is an estimate made by a payroll system that can see one job. Anything it does not know about, a second job, a working spouse, investment income, deductions you plan to itemise, has to be written onto the form, or the estimate is wrong in a direction you can predict.
What does each step of the form do?
Steps 1 and 5 are required of everyone. The three in between apply only where they fit you, and the form says to skip them otherwise.
- Your name, address, Social Security number and filing status.
- For holding more than one job, or being married filing jointly with a spouse who also works. Three ways to handle it: the IRS estimator, the Multiple Jobs Worksheet on page 3, or a checkbox when there are exactly two jobs in total.
- Dependants and other credits, available if your total income will be $200,000 or less, or $400,000 or less filing jointly. It is $2,200 for each qualifying child under 17 and $500 for each other dependant.
- The adjustments: other income nobody withholds from (a), deductions beyond the standard deduction (b), and a flat extra amount to withhold from every paycheck (c).
- Your signature. Without it the form is not valid.
Where you hold more than one job, fill in Steps 3 and 4(b) on the form for the highest-paying one and leave them blank on the others.
Why is too little tax withheld?
Almost always a second income. Each employer withholds as though its job were your only one, so each of them applies a full standard deduction and starts you again at the bottom bracket. Together they hold back less than the combined income owes.
Step 2 exists for that. The checkbox at 2(c) is the quickest fix and works where there are two jobs in total; the IRS says it beats the worksheet when the lower-paying job pays more than half of the higher-paying one, and loses to it as the two move apart.
The other regular causes are income nobody withholds from at all, such as interest, dividends or retirement income, which belongs in Step 4(a); and a large bonus withheld at a flat rate below your own, which the bonus guide sets out.
Why is too much withheld?
Usually a form that fitted last year. An extra amount entered at Step 4(c) keeps coming out until somebody removes it, and a job you left mid-year leaves the remaining employer withholding as though you had earned nothing before you arrived.
Leaving credits off does the same thing more quietly. Step 3 is what puts the child tax credit into your paycheck through the year instead of into a refund at the end of it.
When should you file a new W-4?
When something the form asks about changes: marriage, divorce, a birth or an adoption, a job starting or ending, a spouse starting or leaving work, or a real change in your income, your deductions or your credits.
The IRS also suggests checking at the start of each year, and using its Tax Withholding Estimator if you are filing the form partway through a year, expect to work only part of one, or receive bonuses, dividends or capital gains.
What happens if you under-withhold?
You pay the balance when you file, and past a certain size the shortfall carries an underpayment penalty on top. You are expected to have paid estimated tax for 2026 if you will owe at least $1,000 after withholding and credits.
Two safe harbours avoid the penalty: withholding and credits covering 90% of this year's tax, or 100% of the tax shown on last year's return. If your 2025 adjusted gross income was above $150,000, or above $75,000 filing separately, the second figure is 110% rather than 100%.
Step 4(c) is the lever for a shortfall found partway through a year, because it adds a flat amount to every remaining paycheck without changing anything else about the form.
How do you check your own withholding?
Compare what is coming out against what the year owes. The take-home pay calculator works out the annual tax on your salary, your filing status and your state, which is the figure your withholding is aiming at.
The IRS estimator is the other half of the check, because it reads your pay stubs and models the withholding itself. Between the two, a review each January is the whole of the maintenance this form needs.