Most people check their withholding status at the end of the year or as filing season arrives, but the middle of the year is just as good of a time as any to double-check your withholding status and make sure it’s accurate. The IRS has a handy tool called the Tax Withholding Estimator, which can help you avoid having too much or too little tax withheld from your wages.
The tool can also help you determine if you need to fill out a new W-4 to submit to your employer, complete a new W-4P, or make additional payments to the IRS. It does this by estimating your annual income, how many children you are claiming for the child tax credit and earned income tax credit, and other items that may affect your taxes for the year.
Before using the Tax Withholding Estimator, gather all necessary documents. This includes your W-2 from your employer, any 1099 forms you have from banks and other payers, and any other forms you need. Gathering as much information as possible will help because the estimator will only be as accurate as the information you enter.
* 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 professional.
Tip adapted from IRS.gov7
7. IRS.gov, February 1, 2021