Why reconciliation matters after changing jobs

When you switch employers during the year, each employer calculates withholding based on the pay and W-4 information it has for you. That can produce under- or over-withholding across the full tax year because withholding is calculated per paycheck, not for your total annual income across multiple employers. Reconciling ensures the taxes withheld from all jobs match the tax you actually owe for the year so you avoid surprises at filing and reduce risk of underpayment penalties.

(Author note: In my practice, I commonly see clients who assume each employer ‘knows’ their full-year income—most do not. A proactive review of W-2s and pay stubs mid-year often prevents a year-end tax bill.)

Sources and tools I reference below include the IRS Tax Withholding Estimator and IRS guidance on withholding and estimated tax (see IRS Withholding Estimator and Publication 505 and Publication 17). For direct IRS guidance, visit the IRS Tax Withholding Estimator (https://www.irs.gov/individuals/tax-withholding-estimator) and Publication 505, Tax Withholding and Estimated Tax (https://www.irs.gov/forms-pubs/about-publication-505).

Step-by-step: how to reconcile your refund after a job change

  1. Gather records now, not just at year end
  • Collect all pay stubs (year-to-date figures) from each employer and any W-2s you already have. Your pay stub’s year-to-date (YTD) federal income tax withheld is the key figure to reconcile.
  • If you worked multiple states, collect state withholding totals too.
  1. Add up total income and total withholding
  • Add gross wages from each job to get your total taxable wages for the year so far.
  • Add the federal income tax withheld (Box 2 on a W-2, or the YTD federal tax from pay stubs if a W-2 isn’t yet available). This total is how much federal tax you’ve already paid for the year.
  1. Estimate your year-end tax liability
  • Use the IRS Tax Withholding Estimator or a tax software estimator to project your filing status, dependents, deductions (standard vs itemized), credits, and final tax liability. The IRS tool is current and accounts for tax law changes (see IRS Tax Withholding Estimator).
  • Alternatively, use worksheets in IRS Publication 505 for a paper estimate.
  1. Compare withheld to estimated tax owed
  • If your total withholding is greater than your estimated tax, you’ll likely get a refund. If it’s less, you’ll owe at filing unless you make adjustments.
  1. Adjust withholding quickly if needed
  • If you expect to owe, submit a new Form W-4 to your current employer to increase withholding or ask for a flat extra dollar amount per pay period. (Guidance on completing W-4 is available on our W-4 overview.) Helpful internal reading: W-4 Form and How Amending W-4 Affects Take-Home Pay and Employer Withholding.
  • If tax liability will be substantially higher this year because of the new salary, you can request additional withholding (Box 4 equivalent on the payroll platform) to make up the shortfall faster.
  1. Consider estimated tax payments
  • If a single employer cannot reasonably withhold enough (for example, if you have significant non-wage income or two high-paying jobs), make quarterly estimated tax payments to the IRS using Form 1040-ES to avoid underpayment penalties (see Publication 505).
  1. Watch safe harbor rules to avoid penalties
  • You generally avoid an underpayment penalty if you pay at least 90% of the current year’s tax or 100% of the prior year’s tax (110% if your adjusted gross income was over $150,000). These safe-harbor rules are summarized in IRS Publication 505.
  1. Reconcile at filing
  • When you file Form 1040, list each W-2 (or attach Forms W-2 you received) and total federal tax withheld. Your refund or balance due is the difference between tax liability and total withholding/estimated payments.
  1. Correct missing W-2s or incorrect withholding
  • If an employer won’t provide a W-2 or it’s wrong, contact the employer first. If unresolved, you can use Form 4852 as a substitute for a missing W-2 when you file your tax return (see IRS guidance in Publication 17).

Practical examples (simplified)

Example A — Underwithheld after a raise at a new job

  • January–June: Job A paid $30,000; federal tax withheld YTD = $2,400.
  • July–December: Job B pays a higher salary; projected annualized income causes a higher marginal rate.
  • If no change to withholding is made, Job B’s payroll may calculate withholding per pay period without annualizing both incomes, leaving a shortfall at year end.
    Action: Use the IRS Withholding Estimator and submit a W-4 with additional withholding or ask payroll for an extra flat amount per paycheck to cover the projected shortfall.

Example B — Overwithheld

  • If combined withholding exceeds estimated tax liability (common when both employers withhold assuming a full-year salary), you’ll receive a refund. You may prefer to reduce withholding to increase cash flow rather than claim a large refund.

Pay-stub checklist: what to verify after a job change

  • YTD gross wages
  • YTD federal income tax withheld
  • YTD state income tax withheld (if applicable)
  • Pre-tax deductions (401(k), HSA, FSA) that reduce taxable wages
  • Social Security and Medicare withholdings
  • Filing status shown on payroll and personal withholding allowances or entries from your W-4

Keeping screenshots or PDFs of pay stubs and the W-4 you submitted helps when reconciling at year end.

Multi-state and special situations

  • If you changed jobs and moved states, you may have withholding in two states and will need to file multiple state returns or a part-year resident return. Our article on Handling Multi-State Payroll Withholding After an Employee Move covers state-by-state nuances.
  • Self-employment or significant 1099 income on top of wages often requires estimated tax payments because employer withholding won’t cover tax on non-wage income.

Year-end moves to reduce surprises

  • Use year-end estimates to increase withholding in the final pay periods if you project owing tax — it’s often easier than making estimated payments.
  • Maximize pre-tax retirement contributions or HSA contributions before year end if they’re appropriate for your situation; those reduce taxable wages and can lower your tax liability.
  • If you’re approaching the higher AGI threshold that raises the safe-harbor to 110%, factor that into withholding decisions.

Common mistakes to avoid

  • Leaving your W-4 unchanged after a large pay increase.
  • Assuming withholding from multiple employers will automatically equalize.
  • Waiting until the last pay period to fix a shortfall; earlier adjustments give payroll time to spread extra withholding across paychecks.
  • Forgetting state withholding and local taxes.

Quick action plan (if you just changed jobs)

  1. Pull latest pay stubs and calculate YTD wages and federal withholding.
  2. Run the IRS Tax Withholding Estimator.
  3. Submit a revised W-4 to your employer (increase withholding or request an extra flat amount) if the estimator shows a likely underpayment.
  4. If payroll adjustments aren’t enough, make a Form 1040-ES estimated tax payment for the quarter.
  5. Re-check before year-end and again after receiving any W-2s.

Professional disclaimer

This article is educational and reflects general guidance current as of 2025. It is not personalized tax advice. For decisions based on your specific income, filing status, or state rules, consult a qualified tax professional or CPA. For official IRS forms and the most current guidance, see IRS.gov.

If you want, our other glossary pages about withholding and W-4 completion can help you complete the practical steps above: Completing Form W-4: Tips for Accurate Withholding and Federal Withholding Basics: How to Adjust Your W-4 Effectively.