How can I adjust my withholding to break even with the IRS instead of getting a huge refund?

The 2020 redesign of the W-4 form actually makes it easier to adjust your withholding to break even. Since you're getting about $5k back, you need to reduce how much is being withheld from each paycheck. Here's what you should do: 1) Use the IRS Tax Withholding Estimator (https://www.irs.gov/individuals/tax-withholding-estimator) which is more accurate than most calculators. Input all your info including your education expenses that might qualify for credits/deductions. 2) On your new W-4, you can either: - Add an amount on Step 4(b) for deductions like your tuition expenses if they qualify, or - More directly, use Step 4(c) to specify an additional amount to REDUCE from your withholding per pay period For your specific situation with tuition payments, make sure you're accounting for potential education credits like the American Opportunity Credit or Lifetime Learning Credit which can significantly impact your tax situation. Remember that breaking completely even is difficult because income and expenses can change throughout the year, but you can definitely get much closer than a $5k refund.

After getting tired of massive refunds, I found the perfect solution using taxr.ai (https://taxr.ai). It analyzed my past tax returns and withholding patterns and gave me a personalized withholding strategy that got me within $78 of breaking even last year! What I love is that it looks at ALL factors - not just the basic W-4 stuff but also things like your education expenses and potential credits. It showed me exactly how to adjust my W-4 and even calculates the specific dollar amount to put in Step 4(c) based on your pay frequency. For someone with education expenses like yours, this is super helpful since the tuition credits can be confusing to calculate on your own. The system also sends reminders to re-evaluate mid-year if you have any major changes (pay raise, new job, etc). Totally changed my approach to tax planning.

Just wanted to follow up about my experience with taxr.ai since I was asking questions earlier. I decided to try it after getting a $6,300 refund last year that drove me crazy (missed out on so much potential investment growth). The interface was actually really straightforward - I uploaded my previous return and answered questions about my current situation including my 1099 work and rental property. It recommended specific quarterly estimated tax payments for my 1099 income while adjusting my W-2 withholding separately. The best part was that it showed me exactly what to put in each box on the W-4 AND created a custom quarterly payment schedule. I'm now 9 months into the year and tracking to be within about $200 of breaking even! Wish I'd known about this years ago instead of giving interest-free loans to the government.

If you're trying to perfect your withholding but still having issues with the IRS (like getting last year's refund), I highly recommend Claimyr (https://claimyr.com). I spent WEEKS trying to reach someone at the IRS about my previous year's refund that was delayed while also trying to adjust my current withholding. Claimyr got me through to an actual human at the IRS in under 45 minutes when I had been trying for days on my own. The IRS agent was able to resolve my previous refund AND help me understand exactly how to adjust my current withholding to break even. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c Seriously, the peace of mind from actually talking to someone who could access my account was worth every penny, especially when you're making withholding changes and want to make sure you're doing it right.

I have to eat my words and apologize for my skepticism earlier. After growing increasingly frustrated with my tax situation (trying to adjust my withholding PLUS deal with a missing refund from last year), I decided to try Claimyr as a last resort. Not only did I get connected to an IRS agent in about 35 minutes, but the agent was actually incredibly helpful. She explained that my previous refund was held up because of a discrepancy with my reported education expenses, and she processed an adjustment while I was on the phone. She also walked me through exactly how to fill out my W-4 to get closer to breaking even, specifically focusing on how to account for my education credits properly in Step 4. Turns out I was making a basic error that would have resulted in me still getting a large refund. I'm normally the first person to call out services that seem fishy, but I'm genuinely impressed and relieved to have finally resolved this.

Hey! I was in your exact situation last year. Got a $4.2k refund and realized I was basically giving an interest-free loan to the government. What worked for me was: 1. I calculated how much EXTRA I wanted per paycheck (in my case the $4.2k ÷ 26 pay periods = about $160 per paycheck) 2. On the new W-4, in Step 4(c) "Extra withholding," I put in NEGATIVE $160 (as "-160") 3. My HR lady said you can't put negative numbers, so instead I added deductions in Step 4(b) that would approximately equal the same reduction (about $16k in my case since I'm in roughly the 25% tax bracket) Just a warning tho - I ended up owing like $800 this year which was more than I wanted. So maybe be a little conservative with your calculations!

Don't forget to consider the whole tax picture when adjusting your withholding. I tried to break even and ended up owing penalties because I didn't account for some investment income! Be careful with tuition deductions too - the income limits change and some of the education credits phase out based on your income. If you're close to a threshold, your calculations might be off. Are you using tax software to prepare your returns? Most of them have planning tools that can help with this too.

Just a heads up from someone who works in payroll - if your goal is truly to break even, be a little conservative with your adjustments. It's generally better to get a small refund than to owe, especially since owing more than $1,000 can sometimes trigger underpayment penalties. Also, if you're paying for school, double check if your parents might be claiming you as a dependent on their taxes. That would affect your ability to claim certain education credits yourself. One last tip - the IRS withholding calculator (mentioned above) is actually really good but you need to have your most recent paystub and tax return handy to get the most accurate results.

As someone who recently went through this exact same process, I'd recommend starting with the IRS Tax Withholding Estimator that others mentioned, but also keeping a few things in mind: First, since you're paying tuition out of pocket, make sure you understand which education benefits you can claim. The American Opportunity Tax Credit can be worth up to $2,500 and is partially refundable, which means it could be contributing to your large refund even if you owe no taxes. Second, when you adjust your W-4, start conservatively. Maybe aim to reduce your refund to $2,000-2,500 this year rather than going straight to breaking even. This gives you a buffer while you learn how the new system works. Finally, consider the timing - if you make changes now, you'll have fewer paychecks left in the year to spread the adjustment across, which means each remaining paycheck will see a bigger change in withholding. You might want to calculate whether that works with your budget or if you should make a smaller adjustment now and fine-tune it for next year. The key is getting comfortable with the process before trying to hit that perfect $0 balance!

I went through this exact same frustration two years ago when I got back a $4,800 refund! What really helped me was understanding that the new W-4 form works differently than the old one - you can't just add "allowances" anymore. Here's my step-by-step approach that got me to within $300 of breaking even: 1. **Use the IRS Withholding Estimator first** - It's way more accurate than generic calculators and will give you specific dollar amounts for your W-4. 2. **Account for your education expenses properly** - With tuition payments, you likely qualify for the American Opportunity Tax Credit (up to $2,500) or Lifetime Learning Credit (up to $2,000). These credits are a big part of why you're getting such a large refund. 3. **For the W-4 adjustment** - You'll probably need to add an amount in Step 4(b) for "Deductions" to reduce your withholding. The estimator will calculate this for you, but roughly speaking, if you want $200 less withheld per month, you'd add about $3,000-3,500 in deductions (depending on your tax bracket). 4. **Start conservative** - Maybe aim for a $1,500-2,000 refund this first year rather than trying to hit exactly zero. You can always fine-tune it next year. Since you're making changes mid-year, the adjustment will be spread across fewer paychecks, so each one will see a bigger change. Make sure that works with your monthly budget! The key is that education credits are often the "hidden" reason for large refunds, so factor those in carefully.