The IRS is encouraging taxpayers to check their tax withholding now to avoid surprises when filing their 2025 tax return. Adjusting your withholding early in the year can help you avoid a big tax bill or an unexpectedly large refund when you file in 2026.
Why Use the Tax Withholding Estimator?
The Tax Withholding Estimator is a free online tool from the IRS designed to help workers, independent contractors, and retirees figure out if they’re withholding the right amount of federal income tax from their paychecks. It can be particularly helpful if you’ve had a recent life change, like getting married, buying a home, or changing jobs.
How Withholding Works
Taxes in the U.S. are paid as you earn income, often through paycheck withholding for employees. This is the portion of each paycheck your employer sets aside for federal income taxes. For self-employed individuals or those with side jobs, it’s the amount you voluntarily set aside to cover estimated taxes.
Benefits of Adjusting Withholding
After using the Tax Withholding Estimator, you might decide to submit an updated Form W-4, Employee’s Withholding Certificate, to your employer or adjust your voluntary tax set-asides. Doing this can:
- Prevent a surprise tax bill and potential penalties when you file.
- Increase your take-home pay throughout the year instead of waiting for a big refund.
What You’ll Need to Use the Estimator
To get the most accurate estimate, gather the following documents:
- All income statements, including those for your spouse if filing jointly
- Data from other sources of earnings, like freelance work or investments
- Your most recent income tax return
Complex Tax Situations
For taxpayers with more complicated tax situations, like those facing the alternative minimum tax, long-term capital gains, or qualified dividends, the IRS recommends referring to Publication 505, Tax Withholding and Estimated Tax, for additional guidance. However, this can be very confusing. Morris and Associates can examine your specific tax situation and provide guidance for your estimated tax.
Make It a Habit
The IRS advises checking your withholding once a year, especially if you’ve recently filed your 2024 tax return or have multiple income streams, including full-time wages, side jobs, or gig work reported on Form 1099-K.
Staying proactive can help you avoid surprises and keep more of your money throughout the year.
We can help you estimate your taxes
Morris and Associates can help you find out the status of your tax rebate if you are uncertain how to do this. We are experience, certified agents in good standing with the IRS and can assist you to prepare and file your taxes – making the entire process quick and easy for you. A tax professional such as Morris and Associates can help you get the maximum refund as quickly as possible. Schedule a tax consultation today.
