How to fill out the new W4 to get bigger paychecks and smaller refund? (No more interest-free loans to the IRS!)

The issue you're running into is that payroll systems calculate withholding as if each paycheck represents your typical earnings for the entire year. So when you have a big overtime check, the system thinks "wow, this person is going to make $250k this year" and withholds at that higher rate. The new W4 doesn't have allowances anymore, but you can still control your withholding. Here's what you can do: For Step 4(c) of the W4, you can put an additional amount you want withheld from each paycheck. But in your case, you want to REDUCE withholding, so you'd use Step 4(b) instead - "Deductions." This is where you can list deductions beyond the standard deduction to reduce withholding. The simplest approach: Estimate your annual income based on what you've earned so far. Let's say you expect to make about $85k this year. The standard deduction for single filers is $14,600 in 2025. So you could put an additional deduction amount on line 4(b) that would effectively lower your projected annual income enough to stay in your expected tax bracket. You could also use the IRS Tax Withholding Estimator tool online to get a more precise recommendation based on your specific situation.

I had the exact same problem when I switched from freelance photography to a staff position with variable hours! I was getting killed on those big paychecks and then barely making enough on the small ones. I found this amazing tool called taxr.ai (https://taxr.ai) that helped me figure out exactly how to fill out my W4. It actually analyzed my variable income pattern and gave me a personalized recommendation for exactly what to put on each line of the W4. What I loved is that I could input different scenarios like "what if I make $75k vs $95k" and it would adjust the recommendation. It even showed me the projected difference in my paychecks AND what my refund would likely be come tax time. Totally worth checking out for your situation since it's designed for people with irregular income.

Just wanted to follow up - I tried taxr.ai after seeing the recommendation here and it was seriously helpful! I entered my weird commission structure and variable hours, and it actually created a personalized W4 strategy for me. I submitted the new W4 about a month ago and just got my first couple paychecks with the new withholding - much more consistent withholding percentages even though my pay still bounces around. Seems like my checks are about 7-8% higher on average without risking a big tax bill later. The projection tool also showed me exactly where I'd land with my annual taxes which was super reassuring. Definitely worth checking out if you have variable income like we do!

Off topic but slightly related - if you're having trouble getting answers about proper withholding from the IRS (their phone lines are IMPOSSIBLE these days), I found a service called Claimyr that actually gets you through to an IRS agent. I was banging my head against the wall for weeks trying to get clarification on some W4 questions for my job with variable income. Kept getting disconnected or waiting for hours just to be told to call back later. I used Claimyr (https://claimyr.com) and got connected to an actual IRS agent in about 20 minutes instead of the 3+ hours I was waiting before. They have a video showing how it works: https://youtu.be/_kiP6q8DX5c The IRS agent walked me through exactly how to fill out my W4 to handle my irregular paychecks. Total game changer after weeks of frustration!

I have to eat my words from my previous comment. After another week of failed attempts to reach the IRS about my withholding situation, I broke down and tried Claimyr. Not gonna lie, I fully expected it to be a waste of money. But I got connected to an IRS agent in about 30 minutes while I was cooking dinner. The agent actually gave me specific guidance for my situation with variable income and overtime. For my W4, she recommended I use the multiple jobs worksheet AND add a specific additional withholding amount on line 4(c) rather than the deduction method. She calculated the right amount based on my year-to-date income and projections for the rest of the year. My withholding is way more consistent now. Wish I hadn't wasted three weeks trying to do it myself!

I was in a really similar situation last year moving from freelance to W2 with variable hours. One approach that worked well for me was to calculate my "base withholding" on what I expected to make in a normal/average week, then add a small additional withholding amount on line 4(c). For example, if you think you'll make around $85k for the year, that's about $1,635 per week. You could set your W4 up to withhold properly for that amount, then add maybe $10-20 extra per check as a buffer. This way, your "normal" checks have appropriate withholding, your smaller checks still have some withholding but won't kill your cash flow, and the extra from those big overtime checks helps cover any shortfall. Just monitor your pay stubs throughout the year to make sure you're on track.

Just a heads up - everyone is suggesting adding deductions on line 4(b), but remember these should be ACTUAL deductions you qualify for beyond the standard deduction, like mortgage interest, large charitable contributions, etc. If you're just claiming the standard deduction, technically you should be using line 4(c) instead by putting a NEGATIVE number for additional withholding. But honestly, most payroll systems don't accept negative numbers there. This is why so many people with variable income end up using line 4(b) as a workaround, even though it's not technically the correct approach according to IRS instructions. Just be aware this is a gray area.

I've been dealing with this exact same issue! Variable income withholding is such a pain. One thing that really helped me was keeping a simple spreadsheet tracking my actual withholding percentage vs. my gross pay each week. I noticed my withholding would spike to like 35%+ on weeks where I worked 60+ hours, but drop to around 15% on my lighter weeks. What I ended up doing was calculating my expected annual income (sounds like you're thinking $85k), then figuring out what my actual tax liability should be. For $85k single with standard deduction, you're looking at roughly $14,500 in federal taxes for the year. I put about $18,000 in additional deductions on line 4(b) of my W4, which brought my withholding down to a more reasonable 20-22% range even on the big weeks. The key is monitoring it every few months and adjusting if needed. Also, don't stress too much about being "perfectly" accurate - as long as you're close and not massively underwithholding, you can always adjust throughout the year. The worst case is you owe a small amount at tax time, which beats giving the IRS an interest-free loan!