WASHINGTON, D.C. — The Internal Revenue Service (IRS) is urging taxpayers to review their federal tax withholding early to avoid any surprises when filing next year. The IRS’s online Tax Withholding Estimator offers a practical way for workers, independent contractors, and retirees to ensure the proper amount of tax is withheld from their earnings.
Designed to prevent both unexpected tax bills and overly large refunds, the Estimator allows taxpayers to make informed adjustments by updating their Form W-4 or modifying the amount voluntarily set aside for tax purposes. According to the IRS, proper withholding can mitigate penalties while offering the flexibility to increase take-home pay.
The IRS highlights the pay-as-you-go nature of the tax system, emphasizing that taxpayers need to pay taxes as income is earned. Regular use of the withholding tool is encouraged, particularly after significant life events such as job changes, buying a home, or marital adjustments.
For accurate results, taxpayers should gather comprehensive income statements, data from side jobs, and their most recent tax return. The IRS advises those with complex tax scenarios, such as long-term capital gains or the alternative minimum tax, to refer to Publication 505, Tax Withholding and Estimated Tax, for tailored guidance.
For more information on the IRS Tax Withholding Estimator, review the Tax Withholding Estimator FAQs at IRS.gov.
The IRS emphasizes that making necessary adjustments now is crucial to avoiding the need for substantial changes later in the year. It encourages taxpayers to revisit the Estimator annually as part of their financial planning routine.
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