Changing Your Withholding

• You can change your withholding from your paycheck at any time simply by filing a new Form W-4 and submitting it to your employer. You can download a Form W-4 from the IRS website or request one from your employer. You do not need to have any specific event happen in your life to change your withholding, but when events occur that affect your withholding, it is to your advantage to adjust it. For example, if you get married, you can update your withholding to use the married rate as well as claiming an additional dependent for your spouse.
  
  

Avoiding Underwithholding

• Some events in your life will increase your income tax burden and therefore you need to update your Form W-4 to reflect these changes. For example, if you get divorced and can no longer claim your wife and children as dependents, and you have to file your income taxes as single rather than married, your withholding would likely need to increase significantly. If you do not adjust your withholding and have too little withheld as a result, you face extra income tax penalties and interest.
  
  

Not Required to Decrease Withholding

• If you experience a change that allows you to claim additional allowances to reduce your income tax withholding, you are not penalized because the IRS permits you to claim fewer allowances that you are entitled. When you do this, you will receive a larger income tax refund when you file your return because you gave extra money to the IRS during the year. However, the IRS will not pay you any interest on the extra money withheld.
  
  

No Effect on FICA Taxes

• FICA, or Federal Insurance Contribution Act, taxes do not use the information provided by your Form W-4 to calculate the amount of withholding. FICA taxes include the Social Security tax and the Medicare tax. Your employer withholds these taxes based on your earned income and does not reduce your taxable income for withholding allowances you claim or pretax deductions, such as medical premiums or 401k plan contributions.