IRS launches new tax withholding estimator

The IRS encourages everyone to use the Tax Withholding Estimator to perform a quick “paycheck checkup.”  This is even more important following the recent changes to the tax law for 2018 and beyond.

The Estimator helps you identify your tax withholding to make sure you have the right amount of tax withheld from your paycheck at work.

There are several reasons to check your withholding:

  • Checking your withholding can help protect against having too little tax withheld and facing an unexpected tax bill or penalty at tax time next year.
  • 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 you are an employee, the Tax Withholding Estimator helps you determine whether you need to give your employer a new Form W-4, Employee’s Withholding Allowance Certificate (PDF). You can use your results from the Estimator to help fill out the form and adjust your income tax withholding.  If you receive pension income, you can use the results from the estimator to complete a Form W-4P (PDF) and give it to your payer.

Plan Ahead: Tips For Using This Program

The Estimator will ask you to estimate values of your 2019 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 2019 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 2019 income and other characteristics and speed the process.
  • Keep in mind that the Estimator’s results will only be as accurate as the information you provide.  If your circumstances change during the year, come back to this Estimator to make sure that your withholding is still correct.
  • The Tax Withholding Estimator 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 Estimator.

IMPORTANT NOTE: This Tax Withholding Estimator works for most taxpayers. People with more complex tax situations should use the instructions in Publication 505, Tax Withholding and Estimated Tax (PDF). This includes taxpayers who owe alternative minimum tax or certain other taxes, and people with long-term capital gains or qualified dividends.

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