• More than three-fourths of Americans overwithhold on paychecks.tax forms image by Chad McDermott from Fotolia.com
  
  

You Can Estimate Your Tax

• The IRS offers convenient tools that you can use to estimate your taxes and determine how much additional to withhold. You can adjust your number of withholding allowances, if needed, and enter a dollar amount in addition to withhold that helps you avoid owing taxes at the end of the year.
  
  

Do Not Withhold Too Much

• It may seem appealing to withhold extra each pay period to get a nice refund at tax time. Realize that you are effectively lending the government your money for free by withholding more than you need to from your paycheck. According to Kiplinger, over 75 percent of American's overwithhold.
  
  

Bottom Line

• Unless you have extra income or would owe additional taxes not accounted for by your W-4, you should not typically need to withhold a lot of extra income on your paycheck. Use the IRS calculator (see Resources) to estimate your taxes and withhold whatever is necessary. Do not add withholdings as a means of saving for a big refund. You are better off putting away the extra funds in a savings or investment account.