Have you ever been surprised by a smaller refund or an unexpected tax bill? You’re not the only one asking why. 

One of the most common reasons people are surprised by their tax refund—or find themselves owing money at tax time—is incorrect withholding. Your withholding determines how much tax is taken out of each paycheck throughout the year, and even small changes in your income, job, or family situation can throw it off balance. 

It is excellent practice to do a quick “paycheck checkup” every so often to make sure your withholding still fits your current situation. This simple review can help you avoid unexpected tax bills—or smaller-than-expected refunds—when filing season comes around. It helps you see how changes—like a new job, a raise, or life events—might affect your taxes. You’ll also get a better idea of how tweaking your withholding now could change what you get back (or owe) when tax time rolls around. 

Here’s something to keep in mind: getting a big refund might feel great—but it usually means you paid more tax than you needed to throughout the year. In other words, you’ve been giving the government an interest-free loan with your own money.  

It’s completely normal to look forward to a tax refund—many people do! But relying on your refund as a kind of savings plan isn’t the most efficient strategy. Ideally, you want to withhold just enough from your paycheck to cover your tax bill for the year—or even owe a small amount when you file. 

At the end of the day, what really matters is your total tax liability. Focusing on that bigger picture helps you manage your money more effectively throughout the year. 

So, consider checking your withholding once or twice a year to stay on track to a targeted amount. If you haven’t run the numbers, you can use the IRS withholding calculator or schedule a tax planning meeting with us to determine the correct withholding you need to help meet your goals. 

Once you’ve done your paycheck checkup, the next step is simple—update your W-4 form and give the new version to your employer. This ensures your paycheck reflects the right amount of tax going forward. Just be careful not to reduce your withholding too much—under-withholding can lead to an unexpected tax bill and even penalties when you file.