The IRS offers a Withholding Calculator tool that can help you determine whether you need to adjust your Form W-4, Employee’s Withholding Allowance Certificate. These adjustments can help avoid having too much or too little Federal income tax withheld from your pay.
The IRS Withholding Calculator contains 5 screens of questions that takes less than 5 minutes to complete and works for most taxpayers. People who pay self-employment tax and alternative minimum tax should refer to Pub 505.
What you will need to use the Withholding Calculator:
- your last pay stub
- your last tax return
- estimated values such as property taxes, charitable contributions etc.
The last screen of the IRS Withholding Calculator shows your personal results. *Keep in mind the results are only as good and accurate as the information put in to it.*
An example result is below:
Based on the information you previously entered, your anticipated income tax for 2017 is $3,341. If you do not change your current withholding arrangement, you will have $10,120 withheld for 2017 resulting in an overpayment of $6,779 when you file your return. If you want your withholding to more closely match your anticipated tax, adjust your withholding on a new Form W-4 as follows:
- For the only job you entered (which has a projected salary of $58,000): 13 allowances.
- Check the “Married” box on your Form W-4
Assuming this recommendation is in effect for the rest of 2017 your expected refund should be about $4,650. Following this recommendation will ensure that the amount withheld from your wages will cover all of your projected tax liability while minimizing your refund.
Caution! The recommended number of allowances will result in no income tax being withheld from your pay (because your year-to-date withholding is already sufficient to meet your anticipated tax). Therefore, you should analyze your withholding again at the beginning of 2018 (or any time there is a change to your tax situation). If you do not check your withholding at the beginning of next year, you will likely be underwithheld for 2018.
Changes in life events are always a good time to use the IRS Withholding Calculator, these include:
- New employment
- Receive a raise or bonus
- Change 401K contribution limits
- Have a baby
- Get married or divorced
- Buy a home making
Thank you FreeDigitalPhotos.net and creator Stuart Miles for use of the media image.