You certainly can use the W-4 to have more money withheld. This would be appropriate if you had regular income that was beyond that of your employment - for example, if you have $250k invested in a dividend paying mutual fund that generates a fairly consistent amount of income each year. The W-4 isn't exactly intended for this purpose, but there's no reason not to use it this way if the income is regular given how easy it is to do - set it and forget it.
However, if this is not the case - if you have unpredictable or one-time income, the W-4 is not the most efficient way to do this. In those cases, you need to do one of two things.
- Make sure you're withholding at least up to the safe harbor, which is for most people 100% of their previous year's tax owed or 90% of this year's tax. (If you are a higher income taxpayer, read Publication 505 as the amounts required may be higher). Pay estimated taxes using https://irs.gov/Payments to get up to that amount if needed.
- Make explicit estimated payments for the unpredictable/one time income. For example, if you receive a dividend of $20,000, and you believe it to be a qualified dividend, you could make an estimated payment of 20% ($4000) or less depending on your income (qualified dividends can be 0%, 15%, or 20% depending on your income).
It's not hard to make an estimated tax payment, as long as you remember to keep track of them at tax time. (I put a reminder in google calendar of each payment that is set to remind me Jan 31, and if I don't do my taxes right then, I move the reminder to the next few weeks, so I don't forget!)
You should make any estimated payments in the same quarter the income comes in, if possible - so if you get a $20k dividend in July, pay that $4k by September. Publication 505 has the dates the payments should be in by.
The reason not to use the W-4 for these unpredictable or one-time payments is that the next year you'll over-withhold unless you correct it again, and it's a pain to keep correcting like this. It's quite easy to make the one time payment, rather.
And again, remember the safe harbor - if you're talking a few thousand at most in dividend income, odds are you're within the safe harbor anyway. 90% of taxes due leaves you a lot of wiggle room (and no penalty under $1000, either).