This is a suggestion for all tax planning not just the W-4 issues as stated within this post community!
With years of fretting over the same issues through my working career and now in retirement, the consistent question we all face is "What will our taxes be, come the end of the year"? And that drives our choices on the W-4 or planned withholding once you are in retirement. The second question is, "What do you want at the end of year - a refund or to pay"?
The tool to answer the first question is this very product you are using now - TurboTax. I have used this product to answer this important question for years. TurboTax is not just a tax reporting tool; it can also serve as a planning tool as well.
Here are the steps: (new job, old job, changing job, life changes - new family, etc.)
First - Use TurboTax as a planning tool and fill in the details that fit your life as if it were the end of the year. This will give you an idea of your taxes both Federal and State as of the last tax code update. (You have to accept this is going to be off by that which the tax code changes and the tax tables change but it will be better than a guess). You have the data to fill out the TurboTax fields even if you just changed jobs or this is you first job - what will your wages be, what will your deductions be - projected on both. If you have prior years of TurboTax experience, use those numbers to help you with the detail. This is a "working" copy of your tax status and liabilities so update it through the year as data changes or becomes known (raises, second job, marriage, divorce, children, etc.).
Second - Use the TurboTax forms options to get data on your taxes, such as tax rate, comparisons year over year, etc. Review these MANY informational reports and understand them as they are worth your time. Using these forms as "what-if" results, make changes to your copy of TurboTax and see the results to your taxes as displayed in TurboTax. This data will be your guide in filling out the W-4 and tax withholding plan depending on your situation.
You can create multiple "versions" of your tax return by saving versions of your TurboTax file with different names as you wish. Use a name that makes sense for the data you are entering into that version of your return. My naming conventions look like this: "2023 - chg to stock div xyz co". Then I know what I'm tracking in this version. I do not know of any limit to how many versions you can create. But make the name meaningful so you know which version is showing what changes. I enter all the data that is known at the time and have just a few (one income and one expense) categories that I use to make changes to and make changes to those fields only, then track the results - a more scientific approach!
Once you have this done, you will know what results are needed from your W-4 entries and you will be able to reduce or eliminate the surprises at tax time. And you can more accurately achieve the results you wish. A note on that - if you like having a return, consider that you are effectively providing the government with an interest free loan for the year as well. I strive to pay a small amount at year-end and keep my funds invested earning me income through the year, but this is a very personal choice. However, using TurboTax as a planning tool, you will have the information to make the adjustments to your W-4 to achieve the results as you wish.
