Withholding is the federal income tax your employer takes out of each paycheck and sends to the IRS on your behalf. The goal is for the total withheld over the year to match what you actually owe. When it doesn't, you find out in April — either as a refund or a bill.
You control withholding with your W-4. If last year's outcome wasn't what you wanted, change the form and this year's checks adjust accordingly.
A big refund isn't a win
A $3,000 refund feels like free money. It isn't. It's your own money coming back — money you overpaid all year and the IRS held with no interest. You essentially gave the government a 12-month, zero-interest loan and got the exact same dollars back with nothing extra.
That $3,000 spread across 26 biweekly paychecks is about $115 more in each one. In your account, that could be paying down a credit card at 22%, sitting in a savings account earning interest, or just covering the month. A refund means it did none of those things.
None of this is about paying less tax. Your total tax bill is the same either way. It's about whether you keep your money during the year or lend it out and wait.
If your refund is too big
You're having too much withheld. Pull it down:
- Add dependent credits in Step 3 if you have qualifying children or other dependents and didn't enter them. Children under 17 are $2,000 each, other dependents $500 each. This is the biggest legitimate lever for most families.
- Uncheck the Step 2 multiple-jobs box if your situation changed — you dropped a second job, or a spouse stopped working. That box raises withholding; if it no longer applies, it's over-withholding.
- Enter deductions in Step 4(b) if you itemize above the standard deduction.
If you owed money
Not enough came out. Push it up:
- Check the Step 2 box if you have a second job or a working spouse and hadn't checked it. This is the most common reason people owe — two jobs each withhold as if they're your only income, so the total falls short.
- Add a flat amount in Step 4(c), extra withholding. This is the cleanest fix. Take what you owed, divide by the number of paychecks left in the year, and enter that. Owed $1,300 with 20 checks to go? Put $65 in Step 4(c) and you've closed the gap.
- Report side income in Step 4(a) — freelance, interest, dividends — so tax on it gets held out of your regular check instead of hitting you all at once.
Aim for close to zero
The sweet spot is a small refund or a small bill — a few hundred dollars either way. That means your withholding tracked your actual tax closely and your money stayed with you during the year. Chasing exactly zero isn't worth the stress; getting within a few hundred dollars is a good year.
Check it once a year, and any time your life changes — new job, marriage, a kid, a raise. The IRS Tax Withholding Estimator (linked on the W-4 page) will take your numbers and tell you exactly what to enter.
Making the change
Everything above happens in the W-4 editor in your Employee Portal. For where the fields are and how to save them, see Profile & W-4. One thing to know: changes apply going forward, to your next pay period. They don't reach back and fix checks that already ran, so make the change before the paycheck you want it to affect.
Related: How to fill out your W-4 · Profile & W-4 · Update your W-4 after marriage or a new child.