Hello, I filled out the W4 form in 2022 and significantly less Fed tax was taken out. I am paying much less federally than last year. Should I withdraw the form 2023?

[Karaskevicus20]

W 4 form less tax out of check and owe less when filing

[leeloo]

Yes, that is how it works. You have the choice to have a larger paycheck or a larger refund (or less of a balance due). If you are okay with how things are, leave it. You can always adjust Form W-4 to suit your needs. Employer permitting, you can change it whenever you want.

[BrittanyS]

If you feel like you are not having enough being withheld from your check you will need to make an adjustment to the W-4.  Claiming dependents on the W-4 will cause fewer taxes to be withheld.  

Intuit states, "In the past, the W-4 was based on a system of withholding allowances. You typically filed a new form when you started a job or needed to adjust your tax withholding. The IRS replaced the method for determining the amount to withhold beginning in 2020 to reduce the complexity of calculating how much to withhold from each paycheck. It also changed the W-4 Form to increase the understanding and accuracy of the withholding system.

While the withholding form uses the same underlying information as the old design, it replaces the complicated worksheets from the old form with more straightforward questions. These changes should make it easier for employees to more accurately determine how much should be withheld from their paychecks.",

For more information, see the link below:

What is a W-4?

@Karaskevicus20 

[Karaskevicus20]

Thank you both for your response.  It seems strange that once I completed the form that Federal tax withdrawn from my check was less and then when filing this year I owed less than the prior year.  It's a good thing but didn't know if I should be concerned with not paying enough.  

[Karaskevicus20]

Thanks for your response.  I'm a little perplexed by it, once I filled out  the form less was withdrawn from my check and I owe less when filing.  Still owe but just surprised there was a big difference in what owed.  Almost seems too good to be true.  

[MayaD]

Did you increase your 401k contribution? Contributions to a traditional 401(k) are deducted from your paycheck before federal income taxes are withheld. Pre-tax contribution lowers your total taxable income which means you might owe less in income taxes.

Also, if you made Traditional IRA contribution it might have lowered your taxable income. Traditional IRAs are usually pre-tax contributions, meaning your contributions are placed in your IRA before being taxed, lowering your taxable income for the current tax year.