This video was published by the IRS.
Did you recently get married, have a baby, or adopt a child? Did you start a new job or get a raise? Was your tax refund not what you expected or did you owe additional tax when you last filed? If any of these situations describe you, it’s time to use the IRS Tax Withholding estimator. Withholding refers to the amount of Federal Income Tax taken out of your paycheck.
Taxes are pay-as-you-go. This means you pay your tax during the year as you make money rather than paying it all at once at the end of the year. If you have too little taken out, you will owe tax and maybe a penalty. If you have too much taken out, you will get a refund. To use the tax withholding estimator, you will need two documents:
- Your most recent tax return
- Your most recent paystub
The withholding estimator will help you determine if you need to fill out a new IRS Form W4. If the estimator suggests that you need to change your withholding, then you should complete and submit a new W2 to your employer as soon as possible. The earlier you check and get the new W2 to your employer, the more time there is for withholding to take place evenly during the rest of the year.
You can also use the estimator if you are self-employed or if you pay taxes on a pension. Also, if you want a big refund, or no refund, the estimator can tell you how you can do that. By the way, the estimator does not ask for your name, Social Security number, address, or bank account number. And the IRS does not keep the information you enter.
If your circumstances change, revisit the IRS Tax Withholding Estimator and enter the updated information to make sure your withholding is still correct. To get started, go to IRS.gov/withholding.