Yes, for the current year you can update the Form W-4 to withhold the extra $150-200 per month from payroll since you owe $2,000 this year and want to avoid owing taxes on the next filing. Keep in mind any additional income earned compared to prior year. Any increase could affect your tax liability and the amount to withhold.
Increase withholdings to cover shortfall and align with annual tax liability:
- Estimate your total annual tax liability for 2025. Based on your recent filing, include the $2,000 owed plus your expected liability for the year.
- Calculate monthly withholding: Divide the total annual tax liability by 12. For example, if your total liability is $24,000 that will be $2,000 per month. Adjust the Form W-4 to withhold this amount.
- Use the IRS Form W-4 and the Withholding Estimator to determine the correct allowances or additional withholding amount. You can specify an extra $150-200 per month in the "extra withholding" section of the Form W-4. The extra withholding line item can be found on line 4c.
- Submit the updated W-4 to your employer before June to ensure the new withholding starts on time.
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Have an amazing day! Zachary W (CPA 9+ years)
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