When should I update my W-4 and when should I say I am married?

Yes, if you are getting married in 2012, even next December, for tax purposes, you are married for the year. Run your W4s as married.

See Fairmark. You'll notice that at the lower end, the tax on a couples' income is the same as two singles making half each. There's still a marriage penalty, but only at much higher incomes. So, while I maintain my answer, the new calculation may produce a withholding pretty similar to what you'd have as a single filer.

To see the exact impact of single/married and withholding allowances, you want Circular E. After you tinker with the W4 and see what it tells you, this will show you the exact amount you can expect withheld.

I personally believe that I spend my money better than the US Government does, so I do my best to keep my refund as close to 0 as I can even if that means sometimes I need to send in a check on April 15. If that is your goal then choosing married at the start of the year will reduce your withholding through out the year.

If you prefer to have a larger refund then you can leave your withholding at single until you are married. This way if something happens and you are forced (or choose) to postpone your wedding you will not have a nasty shock of owing or a very small return.

If you spouse will have a larger income than you, you may want to leave your withholding at single to avoid having to pay in at the end of the year.

Well, logically you should fill up the position as on the date of the filling. You are planning to marry, tax can not be done on the basis of planning and if you are not married how can you sign as married. Suppose you signed as married and God forbid for any reasons it is deferred to 2013, then?

Being married and planning to get married is something very different.

I am sure there must be having option to redo your W4 in future and you should revise your W4 after you get married. Sign as married when planning to get married is factually wrong and should not be done.

As pointed out by ulty4life, the IRS withholding calculator advises people to choose their withholding to more closely match their anticipated taxes.

In my particular case I will be married in a couple of months and because my fiance is not employed I have already over payed in taxes for the year. Based on the good-faith honest information I entered, the IRS website recommends the following for me: "to more closely match your anticipated tax, adjust your withholding on a new Form W-4 as follows: For the only job you entered (which has a projected salary of $24,400): 5 allowances. Check the “Married” box on your Form W-4"

It then goes on to detail the amount of taxes I would have paid and an estimate of my return assuming that I submit this new W-4 before my next paycheck.

The IRS instructions for form W4 say specifically "Step 1(c). Check your anticipated filing status. This will determine the standard deduction and tax rates used to compute your withholding." They are stating that you are answering for under penalty of perjury what you believe to be true. So if you are getting married this year you would be anticipating filing as a married person.