Income tax withholding
When you start a new job, you’ll complete Form W-4. This is the Employee's Withholding Allowance Certificate, from which your employer determines your rate of tax withholding. It’s based on the personal allowances you declare or calculate, your income and any additional tax you wish to withhold. The IRS recommends that you complete a new W-4 annually or whenever your life circumstances change, to prevent having tax deducted at an unrealistic rate. If you regularly owe taxes when you file your return, or if you have other income sources or deductions that may affect your tax rate, adding an additional withheld amount on line 6 of your W-4 may put you in a refund position.