As taxpayers, it is in our best interests to ensure that our employers are taking the right amount of tax from our wages to remit to the government.
Without ensuring this, employers may not withhold enough tax off your paycheck. This can cause you to pay more tax, on top of your income tax, than you would have otherwise anticipated, and even penalties at the end of the year.
Fortunately, verifying paychecks is now more convenient and accurate than before through the IRS tax withholding estimator.
The IRS tax withholding estimator works as a ‘paycheck checkup’ tool that helps you estimate your income tax and compares that estimate to your current tax withholding.
While the tool is very easy to use, as anyone working in tax accounting firms in Texas would tell you, ensuring you have all the bases covered is always helpful.
As such, as your trusted provider of tax services in Round Rock, Texas, we at KF Tax & Accounting, P.C. list down the simple steps you need to follow to make the most of your IRS tax withholding estimator.
- Prepare your documents
Make sure you have a copy of your most recent pay stub and tax return on hand.
- Visit the tax withholding estimator page on IRS.gov at www.irs.gov/individuals/tax-withholding-estimator to get started. Then answer the questions to the best of your knowledge.
- Review your results
How is your income tax estimate compared to your current tax withholding? Target an amount close to zero or the refund amount. This will help you decide if you need to change your withholding with your employer.
We hope this entry helped! For more practical tips like these and insights about accounting and bookkeeping services, make sure to check back next time.