The federal income tax is a pay-as-you-go tax. You must pay the tax as you earn or receive income during the year. There are two ways to pay as you go, either by employer withholding or estimated tax payments. Employer withholding: If you are an employee, your employer generally withholds income tax from your pay. […]
Update as of August 11, 1:00pm, ET: President Trump signed an executive memo on August 8, 2020 that calls for a deferral of payroll taxes for employees. To understand how this may affect your business or your team read Gusto’s analysis of the Payroll Tax Deferral Executive Memorandum. Please note we use affiliate links to products for which […]
The IRS encourages everyone to use the Tax Withholding Estimator to perform a “paycheck checkup.” This will help you make sure you have the right amount of tax withheld from your paycheck. There are several reasons to check your withholding: Checking your withholding can help protect against having too little tax withheld and facing an […]
WASHINGTON — The Internal Revenue Service is reminding taxpayers that using the IRS Tax Withholding Estimator to do a Paycheck Checkup can help them have the right amount of tax withheld and avoid surprises when filing next year. Because income taxes are pay-as-you-go, taxpayers are required by law to pay most of their tax as income is received. There […]
When was the last time you did a quick “paycheck checkup”? The IRS Withholding Calculator allows you to do just that. It will help you identify your tax withholding to make sure you have the right amount of tax withheld from your paycheck at work.
Why Should I Check My Withholding?
- No-one wants an unexpected tax bill at tax time next year! Use the withholding calculator to make sure you’re not having too little tax withheld in your paycheck.
- Don’t pay too much tax! Getting a refund at tax time feels great, but some people prefer to have less tax withheld up front. Get the withholding correct, and you may receive more in each paycheck rather than a lump sum refund.
What Do I Do With The Results?
- If you are an employee, the Withholding Calculator helps you determine whether you need to give your employer a new Form W-4, Employee’s Withholding Allowance Certificate.
- Submit the completed form to your employer as soon as possible. Withholding takes place throughout the year, so it’s better to take this step as soon as possible.
- If you receive pension income, you can use the results from the calculator to complete a Form W-4P and give it to your payer.
Be Prepared: Tips For Using The Calculator
The Calculator will ask you to estimate values of this year’s income, the number of children you will claim for the Child Tax Credit and Earned Income Tax Credit, and other items that will affect your taxes for this year. This process will take a few minutes. You will need to:
- Gather your most recent pay stubs.
- Have your most recent income tax return handy; a copy of your completed Form 1040 will help you estimate your income and other characteristics and speed the process.
- Keep in mind that the Calculator’s results will only be as accurate as the information you provide. If your circumstances change during the year, come back to this Calculator to make sure that your withholding is still correct.
- The Withholding Calculator does not ask you to provide sensitive personally-identifiable information like your name, Social Security number, address or bank account numbers. The IRS does not save or record the information you enter on the Calculator.
This Withholding Calculator works for most taxpayers. People with more complex tax situations should use the instructions in Publication 505, Tax Withholding and Estimated Tax. This includes taxpayers who owe self-employment tax, alternative minimum tax, the tax on unearned income of dependents or certain other taxes, people with long-term capital gains or qualified dividends, and taxpayers who have taxable social security benefits. (The calculator won’t determine the taxable portion of your social security benefits, but if you estimate the taxable amount (e.g., using the worksheet in the Form 1040 instructions), you can enter that into the calculator as other nonwage income so that the calculator can take it into account.).
Special Note for 2020: If you follow the recommendations at the end of this Calculator and change your withholding for 2019, the IRS reminds you to be sure to recheck your withholding at the start of 2020. This is especially important if you reduce your withholding sometime during 2019. A mid-year withholding change in 2019 may have a different full-year impact in 2020. So if you do not file a new Form W-4 for 2020, your withholding might be higher or lower than you intend. To help protect against having too little withheld in 2020, we encourage checking your withholding again early in 2020.
If you have additional questions about your withholding, please consult your employer or you tax advisor.
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