An important reminder has been issued by the Internal Revenue Service (IRS). Tax returns for 2024 have already been filed by millions of Americans.
Thus, it’s time to see if their tax withholding needs to be updated. You only need to utilize the Tax Withholding Estimator. In addition to being user-friendly, it is free to use.
Actually, you may estimate how much federal income tax you want your employer to deduct from your paycheck using this IRS calculator.
You won’t pay too much or too little, and you’ll get an accurate return this way. In case you were unaware, your take-home pay, tax refund, and tax owed are all impacted by your withholding.
What is the IRS tool’s operation?
Taxpayers can estimate their federal income tax withholding with the aid of the Tax Withholding Estimator.
Second, it will assist you in determining the potential impact on your take-home pay, tax obligation, or refund.
Additionally, it will assist you in selecting an expected withholding amount that suits your needs.
Remember that you won’t get reliable results if you enter inaccurate information. They are only as accurate as the data you input.
Before you begin using the Tax Withholding Estimator, you must have the following ready:
- The most recent tax return
- Additional income data, such as self-employment, side work, or investments
- Paystubs for every job, including the spouse’s
Which taxpayers should not utilize this tool, according to the IRS
Actually, if you have nonresident alien status, you cannot utilize this tool. The IRS states that in this situation, you must use Notice 1392 Supplemental Form W-4 Instructions for Nonresident Aliens.
In addition, if your tax position is complicated, you won’t be able to use the Tax Withholding Estimator. For instance, if the alternative minimum tax is included.
Read Also: SSA Announces Updates: New Payments and Requirements Effective May 14
Many taxpayers are unsure of the best time and reason to update their tax withholding. There are a number of reasons, and the IRS has emphasized the following:
- When you get married, when you have a child or adopt a child, when you have a new career, when you have other paid work, when your income changes significantly, and when you purchase a home
Why should your tax withholding be updated in April 2025? Just so you know, it can guard against having too little tax deducted. As a result, it will shield you from an unanticipated tax charge or penalty when taxes are due in 2026.
It will also allow you to modify your withholding taxes in advance.
As a result, when tax season begins and you file the next year, you get a larger paycheck and a lesser tax refund.
