Usually, we file a tax return to calculate the income tax on our taxable income for the year and check how much of this has been already paid through withholding tax. If you discover that you have paid more, you can claim a tax refund. If you have paid less, you may have to pay a tax bill. If you have paid a lot on your tax bill this year and do not want a repeat of the same, you can modify your Form W-4 details to increase your tax withholding. This way, you will owe less ( probably nil as well!) next year.   On the other hand, if you have received a huge tax refund, you can modify your Form W-4 details to decrease your tax withholding. This is to avoid getting less on your paychecks the entire year.