The IRS has released a new Tax Withholding Estimator and is encouraging everyone to perform a “paycheck checkup”. The new tool is to assist with better calculating taxes and withholdings to reflect recent changes in the tax law.
Reasons to check your withholding:
- Calculate enough withholding to ensure you don’t have an unexpected tax bill
- Calculate enough withholding to ensure no penalties and interest for underpayment of tax
- Better calculate withholding and plan your refund
- Look for tax planning opportunities
Once you have determined if your withholding is adequate or needs to be changed, you will need to work with your tax preparer and/or HR department of your employer to get your withholdings corrected. To do this you will need to complete a new Form W-4 for your employer.
Although this is a useful tool provided by the Internal Revenue Service it may not work for all. If you need help using this tool or your situation is more complex, we can be contacted HERE. We’re always happy to help.