Ever found yourself wondering whether or not you’re filling out your W-4 correctly or the number of allowances you are claiming will help your employer withhold adequate tax from your paycheck? If you answered yes to these questions, you’re not alone. That is why IRS launches a campaign called ‘Paycheck Checkup’.
To help people understand the implications of the new Tax Cuts and Jobs Act passed in December, IRS has introduced several new features regarding tax withholding for 2018. The idea behind the campaign is to assist people in filling out the W-4 correctly so they don’t get too much or too little tax withheld from their paycheck for tax year 2018. One of the features is the Withholding Calculator. Employees can use this calculator to verify that they are having the correct amount of tax withheld from their paycheck.
The IRS is asking everyone to use the withholding calculator and check their withholdings as soon as possible, specially for the following people:
- Two-income families
- People with two or more jobs at the same time or who only work for part of the year
- People who claim credits such as the Child Tax Credit
- People who claim older dependents, including children age 17 or over
- People who itemized deductions in 2017
- People with high incomes and more complex tax returns
- People with large tax refunds or large tax bills for 2017
How to use the withholding calculator?
IRS has provided the following tips on how to use the withholding calculator:
- Use their most recent pay stubs and federal income tax return to help estimate income and other items for 2018. Keep in mind the new tax law made significant changes to itemized deductions.
- Fill in all information that applies to their situations.
- Make estimates when necessary, but keep in mind the results are only as accurate as the information entered.
- Check the information links embedded in the program whenever ttaxpayers have questions.
- Print the final screen that summarizes their entries and the results. Use the results from the Withholding Calculator to determine if they should complete a new Form W-4, Employee’s Withholding Allowance Certificate.
According to the IRS, the IRS has no record of information entered into the calculator as the calculator does not ask for personally identifiable information.