Life changes
Changed Jobs This Year? What It Means for Your Taxes
A job change mid-year means at least two W-2s, a retirement account to deal with, and a decent chance your withholding no longer fits. Here is what to watch.
Reviewed by LaToya Clark-Thompson, FounderLast updated
What changes on your return
Each employer sends its own W-2, and every one of them goes on your return. Your total income is the sum of them, and the tax owed is figured on that total, not on each job separately. That is where many surprises come from: each employer withheld as if its pay were your whole year, so if the new job pays more or you overlapped two jobs, withholding can fall short.
Social Security tax has a yearly wage cap. One employer stops withholding it once you hit the cap, but two employers do not talk to each other. If your combined wages passed the cap, the extra Social Security tax withheld comes back to you as a credit on your return. Software and preparers catch this only if every W-2 is entered.
Your old retirement plan
You can usually leave a 401(k) with the old employer, roll it into the new plan, or roll it into an IRA. A direct rollover, where the money moves straight from one plan to the other, still produces a Form 1099-R, but the code on it shows it was a rollover and it is not taxed.
Cashing out is different. The plan generally withholds federal tax up front, the rest is taxable income, and if you are under age 59½ an additional early-withdrawal tax often applies unless an exception fits. If you received a check and meant to roll it over, there is a short window set by law to deposit it in another plan or IRA, and you have to replace the withheld amount from other money to roll over the whole thing.
One more trap: the annual limit on your own 401(k) contributions is per person, not per employer. If you contributed heavily at both jobs, you may have gone over, and the excess needs to be fixed with the plan.
Bonuses, final pay and benefits
- Signing bonuses and payouts of unused vacation are wages and appear on the W-2, often withheld at a flat supplemental rate that may not match your real bracket
- If your new employer offers a health savings account, contributions from both jobs count toward one annual limit (Form 8889 reports it)
- A gap in health coverage, or Marketplace coverage between jobs, brings Form 1095-A and Form 8962 into the return
- Moving costs for a new job are no longer deductible for most people; the main exceptions are active-duty military moving under orders and certain intelligence community employees, covered on our military move page
What to bring and common mistakes
- A W-2 from every employer during the year, including the one you left
- Any Form 1099-R from an old retirement plan, plus the rollover paperwork
- Form 1095-A if you had Marketplace coverage at any point
- Your final pay stub from each job, which helps check the W-2 totals
The mistakes that cause letters later: a missing W-2 from the old job (old employers mail it to the address they have on file, so update it), a rollover reported as a cash-out, and nobody updating the W-4 at the new job. Run the new numbers through our W-4 withholding calculator and see why you might owe this year if the result is a balance due.
When a preparer is worth it
Two plain W-2s are usually straightforward. It is worth having us prepare the return when a 401(k) was cashed out or rolled over, when stock or equity awards came with either job, when you moved states for the work, or when Marketplace coverage covered part of the year. Book a tax preparation appointment and bring the documents above; if you expect another change next year, tax planning can set the withholding right from the start.
Frequently asked questions
Why do I owe taxes after changing jobs?
Each employer withholds as if its pay is your only income for the year. When you add two W-2s together, the total can land in a higher bracket than either employer assumed, so not enough was withheld. Overlapping jobs, a raise at the new job and a bonus taxed at a flat rate all make this more likely. Updating your W-4 at the new job prevents a repeat.
Is a 401(k) rollover taxable?
A direct rollover from one plan to another, or to an IRA, is generally not taxed. You still receive a Form 1099-R, and the distribution code shows it was a rollover, so it must be entered on your return correctly. If the plan paid the money to you instead, it becomes taxable unless you deposit it into another plan or IRA within the window the law allows.
Did I pay too much Social Security tax with two jobs?
Possibly. Social Security tax stops at a yearly wage cap, but each employer applies that cap separately. If your wages from all employers together passed the cap, the extra Social Security tax withheld is refunded as a credit on your return. This only applies across different employers, and it only shows up if every W-2 is entered.
What if my old employer never sent my W-2?
Contact the old employer first and confirm the mailing address they have for you; many also post W-2s in their payroll portal. If you still cannot get it, the IRS can help after the normal mailing period, and your final pay stub can be used to estimate the figures. File only when the numbers are solid, because the employer reports the same W-2 to the IRS.
Not the question you had? The full tax FAQ covers more ground, and our client reviews say what the work is actually like.
Related pages
You started your first job
First W-2, first W-4, first return. How it works when your parents still claim you.
Learn moreYou lost your job
Unemployment on a 1099-G, severance on a W-2, a cashed-out 401(k) and Marketplace coverage.
Learn moreYou went from W-2 to 1099
Employee to contractor: no withholding, self-employment tax, estimates and new deductions.
Learn moreYou owe taxes this year
Why you owe, why filing on time matters more than paying in full, and the payment options the IRS offers.
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