To make the change, file a new W-4 with your employer. This will change the amount that comes out of your paycheck.
You should do this any time there's a major change in your life -- such as marriage, birth of a child or purchase of a home. Each of these circumstances can affect the amount of tax you'll eventually owe. The IRS offers an interactive withholding allowance calculator and a couple of work sheets on page 2 of Form W-4 to help you figure out just what changes you need to make to your withholding amount.
If you find the IRS language a bit dense, Bankrate explains it in "Understanding the W-4."
The paycheck effect
Those who usually write a big check to the IRS may have to deal with a slight cut in take-home pay so that it doesn't happen again. You can decrease the number of personal allowances on the W-4 form or simply ask that a set amount be taken from your paycheck each period.
To figure out how much, take the amount you paid to the IRS and divide it by the number of pay periods remaining in the current year. No one likes to see a paycheck shrink, but it will make next April much less painful.
If you regularly get a big refund, increase the number of personal allowances. Once you get the correct amount taken out and have a bit more cash each paycheck, don't automatically spend it. Because you're no longer a customer of the Unofficial Bank of the IRS, open an account -- savings, money market or certificate of deposit -- at an institution where your money will earn you, not the federal government, interest.
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