All taxpayers should review their federal withholding each year to make sure they're not having too little or too much tax withheld.
Employees, retirees and self-employed individuals can use the IRS Tax Withholding Estimator to help decide if they should make a change to their withholding. This online tool guides users, step-by-step through the process of checking their withholding, and provides withholding recommendations to help aim for their desired refund amount when they file next year. Taxpayers can check with their employer to update their withholding or submit a new Form W-4, Employee's Withholding Certificate.
Adjustments to withholding
Individuals should generally increase withholding if they hold more than one job at a time or have income from sources not subject to withholding. If they don’t make any changes, they will likely owe additional tax and possibly penalties when filing their tax return.
Individuals should generally decrease their withholding if they qualify for income tax credits or deductions other than the basic standard deduction.
Either way, those who need to adjust their withholding must prepare a new Form W-4, Employee's Withholding Certificate. They need to submit the new Form W-4 to their employer as soon as possible since withholding occurs throughout the year.
Individuals who should check their withholding include those:
Tax Withholding Estimator benefits
The IRS Tax Withholding Estimator can help taxpayers:
Taxpayers should prepare before using the Tax Withholding Estimator by having their most recent pay statements, information for other income sources and their most recent income tax return. The tool does not ask for sensitive information such as name, Social Security number, address, or bank account numbers.
State or local withholding
Some individuals might also need to adjust their state or local withholding. They can contact their state's department of revenue to learn more.
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The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance.
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