If you’re working for an employer and have other income sources outside your job, you should get a Paycheck Checkup. For more information, go to https://www.irs.gov/newsroom/time-for-a-paycheck-checkup.
Doing a paycheck checkup with the Withholding Calculator may help you avoid paying taxes at tax filing time. Go to https://apps.irs.gov/app/withholdingcalculator/.
Other income sources may come, for example, from the exchange of products and services in a sharing economy, interest, dividends, self-employment, capital gains, prizes, or awards.
Taxpayers may find the calculator especially important this year in the wake of changes to the tax code from the Tax Cuts and Jobs Act.
Here are some items to consider if you’re thinking about changing your withholdings to avoid a tax bill:
- You should pay at least 90% of your income tax through withholding.
- You can use Form W-4 to make adjustments to your income if the Withholding Calculator estimates you will have to pay taxes. Go to https://www.irs.gov/pub/irs-pdf/fw4.pdf.
- If you’re generating income from other sources, you can still reduce or eliminate the possibility you’ll pay taxes by claiming fewer withholding allowances on your Form W-4.
- You may also request your employer withhold an additional amount of money from your paycheck if you anticipate having to pay taxes at filing.
- If you have to make additional tax payments through your paycheck, you may use Form 1040-ES, Estimated Tax for Individuals, to calculate an appropriate amount. Go to https://www.irs.gov/pub/irs-pdf/f1040es.pdf.
For additional questions, go to https://www.irs.gov/payments.
Other details may apply, and you can find more information on the IRS website.
* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.
Tip adapted from IRS.gov[12]
[12] www.irs.gov/newsroom/employees-with-other-sources-of-income-should-do-a-paycheck-checkup
