Getting married, having a baby, changing jobs and unemployment may affect your taxes, and it’s better to adjust withholdings early, financial experts say.

The IRS expects a slice of every dollar you earn — taken from your paycheck, withheld from other income or sent quarterly. While overpaying may spark a refund, not paying enough triggers a bill.

And the beginning of the year, particularly after filing your taxes, is a prime opportunity to review your current withholdings, said Or Pikary, a CPA and tax advisor at Mazars, a tax advisory firm in Los Angeles.   

“It’s a tougher pill to swallow at the end of the year when you have a lot more due,” he said.

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When starting a new job, you typically complete Form W-4, dictating how much your employer needs to withhold from each paycheck for federal taxes. Many wrongly assume it’s a one-time activity.

Nearly 45% of tax-filing Americans don’t know when they last updated their withholdings, according to a survey from the American Institute of CPAs. 

That may be a problem since many things can affect how much you need to withhold every year, tax experts say. 

“If certain changes or life events happen throughout the year, it’s up to you to let your employer know about adjusting your tax withholding,” said certified financial planner Philip Herzberg, lead financial advisor at Team Hewins in Miami. 

Some of the most common reasons may include family changes such as marriage, divorce or having children. While tying the knot may shift your filing status, children may add a “new set of game-changing tax breaks,” he said.  

Other lifestyle changes, like buying a home, may adjust your situation if you itemize deductions, since you may be able to claim a write-off for mortgage interest, which may possibly result in a lower bill. 

However, starting a side business or a second job may lead to higher levies, Herzberg said, and you may consider increasing the withholding at your primary job to cover the difference. 

You can double-check your withholding with the IRS Tax Withholding Estimator, but it may be better to run projections with an advisor for complex situations.

The tool may be more accurate if used immediately after your last paycheck, Pikary from Mazars said. And you’ll want to share the specifics with your HR department to fill out a new Form W-4. Refiling the form must go through HR since it’s a payroll change.

With an average refund for the 2020 tax season of $2,815, many Americans may love the windfall. But experts say overpaying throughout the year may be more costly as the economic climate shifts. 

“With interest rates finally set to rise, earning next to nothing on certificates of deposits and savings accounts may become a thing of the past,” said George Gagliardi, a Lexington, Massachusetts-based CFP and financial advisor at Coromandel Wealth Management. “So why give the IRS an interest-free loan by over-withholding taxes?”  

Whether retirees receive income from Social Security, a pension or retirement accounts, they may also need to consider withholdings or quarterly payments to avoid a surprise bill. However, running a tax projection can be more complicated with multiple sources of income, Pikary from Mazars said.