TurboTax 2019 - 2020 Withholding Calculator
Tax payments are quite frankly a depressing thought for all of us, but properly adjusted employee paycheck withholding can help you avoid underpayment issues that could lead to a large lump sum tax payment.
It's important to make an adjustment when needed for avoiding underpaying, or overpaying income taxes through your paycheck withholding.
Underpaying means you no doubt will owe a big lump sum payment when filing your tax return. This also could include underpayment penalties if the proper amount wasn't paid earlier in the year.
Overpaying means that you just gave Uncle Sam a interest free loan to play with when you could have been using that money for some fun stuff of your own. This IRS Withholding Calculator or TurboTax w-4 Calculator can help you avoid either of these scenarios, and end up close to even-steven at year end.
Video: TurboTax W-4 Withholding Guide
IRS Withholding Calculator
This simple to use IRS tool is a quick way to determine if you need to make a W-4 withholding adjustment. If so, it needs to be submitted to your employer for adjustments to your paycheck withholding.
Who Should Consider Making A W-4 Withholding Adjustment?
Your employer deducts withholding taxes based on the number of allowances you have claimed on your W-4 form. It's important to avoid having too much or too little tax withheld.
Many major personal life changes will create a need to make a withholding adjustment. The goal is to end up as close to zero at year end, not owing, and not getting a big refund.
Here Are Several Life Changes Where You Should Consider Revisiting Your W-4 Withholding
You got married…or divorced
Getting divorced will move you back to the single tax filing status and eliminate the marital tax benefits.
Your having a baby…or adopting a child
Many tax advantages come with having dependants. You can claim additional allowances for each dependent, and you may also qualify for the Child Tax Credit, Child Care Tax Credit, Adoption Tax Credit, and others deductions.
You took on a second job, or started a home business on the side
If your income changes due to getting a second job, or having a home business on the side, you should revisit your W-4 withholding calculation. When your income goes up, your tax liability will likely go up as well. In this case, a new W-4 should be submitted to your employer for adjusting paycheck withholding.
Your spouse got a job, or one of you changed jobs
Change in household income, regardless of it being more or less, will most likely require married filing jointly tax filers in a different tax bracket that will require modifying your W-4 allowances.
You were on unemployed for part of the year
If you ended up getting laid off from your job, whether temporary or permanent, you may want to revisit yours, or your spouses withholding.
Adjusting the allowances on a new W-4 is quite easy. The IRS withholding calculator above will walk you through the process step by step in just a few minutes.