How Do I Know If I'm Taking Enough Federal Taxes Out of My Pay Check?

Employers usually include federal income tax deductions on employee pay stubs.
Employers usually include federal income tax deductions on employee pay stubs. (Image: Comstock/Comstock/Getty Images)

As an employee, you are required to pay federal income tax, unless you qualify for exempt. Your employer is supposed to take the tax out of your paycheck according to the information you put on your W-4 form and the IRS withholding tax tables or Circular E. You are responsible for adjusting your W-4 so the appropriate amount of tax is withheld. If you do not adjust it so enough taxes are taken out of your income, you can end up owing the Internal Revenue Service when you file your tax return.

Learn the conditions upon which federal income tax withholding is based. Your withholding collectively depends on your filing status, allowances, wages and the IRS’ withholding tax tables. The more allowances you claim, the less wages you earn, and claiming married or head of household instead of single, all reduce your income tax liability. You are responsible for putting your allowances and filing status on your W-4.

Review your W-4 form to see if you are claiming the appropriate amount of allowances. Read lines A through G of the top portion of the form to understand the allowances you can claim. Each allowance gives you an amount that reduces your taxable income. If you are claiming more allowances than you are entitled to or if you wrongly claimed a filing status that puts you in a lower tax bracket, most likely enough taxes are not being withheld from your paychecks.

Complete a new W-4 form to adjust your withholding conditions. For example, if you are claiming too many dependents, which you cannot account for when you file your federal income tax return, put the correct amount of dependents on line D of the form. Make other line adjustments, if necessary, then tally lines A through G and put the total on line H. Complete the bottom portion of the form (the employee’s withholding allowance certificate) and give it to your employer.

Tips & Warnings

  • If you claim the appropriate filing status and allowances on your W-4, then your tax withholding should be correct. Review the IRS requirements in regards to what qualifies for each allowance. For example, see the qualifications for filing as head of household at the top of your W-4 and ensure you meet the requirements before claiming it as an allowance. Further, consult the IRS' criteria for qualifying child before claiming a child as a dependent.
  • You can use the IRS withholding calculator to help you adjust your W-4 form so you pay the correct amount of federal income tax.

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