The Internal Revenue Service has a new tool to make sure you are withholding the right amount from your paycheck for taxes.
“Using the Withholding Calculator that we used to have was kind of a challenge,” said spokesperson Michael Devine. “The new Withholding Estimator, we’ve given it a new name, it gives you a very, very good and we think, very accurate, view of what you should be having withheld from your paycheck.”
Everyone’s tax situation is different and as your times of life change, your tax circumstances change.
“When you go through the new estimator, it’s going to ask you a series of questions,” said Devine. “Every one of those questions is going to generate more questions. They’re going to help you drill down to where you need to be. It’s pretty smart.”
It’s also important to know that the IRS isn’t going to use these estimates against you.
“We don’t keep any of the information you put in,” said Devine. “It’s just a tool that you can use for free to figure out whether you’ve got enough coming out of every paycheck, or more importantly, if you get money on that side hustle and it doesn’t have withholding, how much do you need to send in estimated payments or other payments, so you don’t have a bill when you file your return next year?”
Be sure to get all of your income documents together to give the Withholding Estimator the best numbers. It’s available at irs.gov.