The IRS recently released a new online tool to help taxpayers make sure they have the correct amount of tax being withheld from their paychecks at work.
The “Withholding Calculator” performs a quick check-up to protect against having too little tax withheld, which could cause an unexpected bill or penalty come tax time. At the same time, with the average refund topping $2,800, you may prefer to have less tax withheld up front and receive more in your paychecks.
If needed, you can then use your results from the Calculator to fill out a new Form W-4 (Employee’s Withholding Allowance Certificate) and adjust your income tax withholding.
Per the IRS website, some tips for using the Calculator:
The Calculator will ask you to estimate values of your 2018 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 2018 taxes. This process will take a few minutes.
- 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 2018 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.
IMPORTANT NOTE: 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, expected to be updated in early spring. This includes taxpayers who owe self-employment tax, alternative minimum tax, the tax on unearned income of dependents or certain other taxes, and people with long-term capital gains or qualified dividends.