Is Your Tax Withholding on Track for 2025?

Why It’s Smart to Check Now—Not Later

In the U.S., income taxes are paid throughout the year—not just at the end. That means if too little is withheld from your paycheck or set aside from your business income, you could owe money to the IRS next spring.

On the flip side, if too much is withheld, you’re basically giving the government an interest-free loan and waiting months for your refund.

Checking your withholding now helps you avoid surprises, prevent penalties, and stay in control of your cash flow.

What Is Tax Withholding?

If you’re an employee, “withholding” is the amount your employer takes out of your paycheck for federal income taxes.

If you’re self-employed or earn freelance income, you typically withhold taxes yourself by making quarterly estimated tax payments.

Why You Should Check Your Withholding Now

Adjusting your tax withholding early in the year means you’ll have time to:

• Avoid underpayment penalties
• Reduce your risk of owing the IRS at tax time
• Increase your take-home pay if you’ve been overpaying
• Stay on track with your financial goals

📌 Example:
Alex is a full-time employee who just started a freelance design side gig. By adjusting his withholding now, he avoids a big tax bill next April for his extra income.

Life Changes That May Require an Adjustment

You should check your withholding if:

• You got a new job or changed employers
• You got married or divorced
• You had a child
• You started a side hustle, freelance work, or rental property income
• You or your spouse received unemployment benefits
• You made investment gains, sold crypto, or received Form 1099-K income

What You Need to Make an Adjustment

To figure out if you need to adjust your withholding, gather:

• Your most recent pay stubs
• All income statements (including your spouse’s, if married)
• Details from freelance work, 1099 income, or side gigs
• Your latest federal tax return

Use these to estimate your income and withholding status. The IRS has a Tax Withholding Estimator, or we can run a full analysis for you.

How to Make an Adjustment

If you’re an employee:

• Submit a new Form W-4 to your HR or payroll department.

If you’re self-employed or have side income:

• Adjust your quarterly estimated payments to match your expected tax bill.

📌 Example:
Monica, a Los Angeles-based writer, noticed her 2024 refund was too high. With help from her Tax Advisor Los Angeles, she lowered her withholding and now takes home more money each month.

How to Stay on Track Year-Round

• Revisit your withholding mid-year, especially after any major life or income changes.
• Keep a calendar reminder to review quarterly taxes if you’re self-employed.
• Don’t guess—get professional guidance to avoid common filing mistakes.

Need Help Calculating the Right Withholding?

At Velin & Associates, Inc., we help individuals and small business owners in Los Angeles avoid IRS surprises. Whether you’re adjusting a W-4 or juggling freelance income, we’ll make sure you’re on track.

For more information about our services, please visit our website.

Velin & Associates, Inc

8159 Santa Monica Blvd STE 198/200 West Hollywood, CA 90046
323-902-1000
dmitriy@losangelescpa.org