The W-4 form determines how much is withheld from your paycheck. There is no requirement that you update this form after you initially file it with your Employer, but based on life changes and undesirable annual income tax return results, you may want to update your form a couple times a year.
When?At the beginning of each year you should adjust for life changes. Married or Divorced, increase or decrease in dependents, or a move to a different State, city or town, or county/local taxing jurisdiction? These can all cause you to need to make potentially substantial changes to your W-4 for a new year.
Maybe more important than the previous example, you may consider having your CPA or tax professional provide you with an analysis of your current withholdings as a planning point for your next income tax filing. This can be done sometime after you have prepared last year’s returns (approx. April 30th) and in some cases again later in the year (approx. September 30th). Having this analysis performed at either one or both of these post filing times of the year can help you to maximize your monthly take home pay while providing some level of assurance that you will not be adversely affected (Surprised) at year end.
If you ask your CPA or tax professional for this analysis, it may cost anywhere from $25 to $40. The peace of mind may be well worth the investment. Alternatively, you can complete the worksheets on page 2 of the W-4 form yourself. This should walk you through the process and provide a reasonable answer. Be sure you adjust for any withholdings already processed during 2013.
You can submit a new W-4 form to your employer at any time during the year and as often as you feel it is necessary. With a little bit of an investment of time and money, you should be able to minimize the stress of the unknown related to your annual tax returns.
The form is available at http://www.irs.gov/pub/irs-pdf/fw4.pdf