How to use the IRS Tax Withholding Estimator Tool (A walkthrough)
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- Опубліковано 23 сер 2024
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Use this tax tool to help your tax withholding selections on one of the following:
IRS Form W-4, Employee’s Withholding Certificate
Article: www.teachmeper...
Video: • IRS Form W-4 walkthrou...
IRS Form W-4R, Withholding Certificate for Nonperiodic Payments and Eligible Rollovers
Article: www.teachmeper...
Video: • IRS Form W-4R walkthro...
IRS Form W-4P, Withholding Certificate for Periodic Pension or Annuity Payments
Article: www.teachmeper...
Video: • IRS Form W-4P walkthro...
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thank you for sharing, when i clicked on the estimator it did show the page that you showed.
Thank you sir! This is super helpful and your mouse clicking is weirdly relaxing haha.
I'm glad it helped!
Thank you! I am curious, if I received a bonus at the beginning of the year, should this be included in both the wages/salary YTD *and* the "I got a bonus" question, or just one of the two?
I would probably only include it in one or the other, but not both.
hi, I recently switch a job, I am using my current job’s information to fill out the W4, after I fill out the information, it said I am owning money. So For step 2, does my previous job count as multiple job too? Thanks you
Great information! Thank you. 🙏🏽
I’m unable to claim my children so I put 0 for dependents but I noticed it changes when you place a number in age in the section. Is it considering it as one dependent to place “0” in the age section? Should I leave it blank?
One more question please. Why does IRS calculator suggests extra withholding for only 1 (higher paying job) now? Previously IRS calculator would suggest additional withholdings for both jobs accordingly.
I'm not sure. However, I believe that the IRS made this change so that only the largest income source has to make the change, instead of having to make tiny changes to multiple W-4 forms.
I Have 2 questions
1. When you add the wages are you putting pre tax/gross or your putting net pay?
2. My checks fluctuate, so should I put an average amount of taxes I pay per pay period?
You should enter your pre-tax wages, because there will be a chance to enter deductions later on. You could try to average out your checks, but if they're too inconsistent, you might not get your desired results. You can do this anyway, just as a baseline for future adjustments, if your tax return is completely out of whack (too much refund or too high of a bill due).
What I might consider is looking at your 2023 tax return (when you file it). Divide your tax liability (Line 24) by your taxable income (Line 15). Then use that as an estimate to aim for when trying to get your withholdings right. Might take you a couple of times, but you can also walk through your Form W-4 for similar results:
IRS Form W-4, Employee’s Withholding Certificate
Article: www.teachmepersonalfinance.com/irs-form-w-4-instructions/
Video: ua-cam.com/video/a7qxsGYLtkU/v-deo.html
Great explanation on using this tool! Question, if we are married filing jointly, I have regular taxes take out, but my spouse job has no federal or state taxes taken out(employer doesn't know how to adjust for their employees) do I adjust the amount on my paycheck to cover what she is needed to be withheld?
You can do this, if that's the most viable way to pay the taxes. Your spouse's employer should be able to process a Form W-4, which would give them instructions on how to withhold taxes. But if they can't (or won't) do this, then adjusting your tax withholdings should accomplish the same goal.
@@teachmepersonalfinance2169 thank you!!
@@teachmepersonalfinance2169 next question, how much would i have to take out? And how do I calculate the amount?
@@davevaldez9130 There is no possible way for me to be able to answer this question. There are too many variables that I don't know which would impact your situation.
What I might suggest is to look at what your current deductions are, then follow the form instructions as intended. After your first (or second pay period, whenever it's processed), take another look. Make a note of how much the tax withholdings changed. Compare this to your tax refund (are you always paying at tax time, or are you getting a huge refund)?
You may need to adjust your W-4 a couple of times to get this to where you want it. Your goal should be to receive a refund at tax time of $1,000 or less (or pay $1,000 or less when you file your return).
Hello, my husband is in military. How do I calculate wages per period that need to be taxed considering that he gets housing allowance all together? Accordingly how do I see exact federal tax per pay period on his paycheck? And is only base salary considered as "correct expected annual income"? Thank you.
You can use your husband's LES for this, then multiply by 12 (while factoring in any advancement or anniversary pay raises during the year). For military personnel, a generally easy rule of thumb is this:
-Pays (special pays, incentive pays, etc.) are included in taxable income
-Allowances (BAH, BAS, family separation allowance, etc.) are not included in taxable income.
@@teachmepersonalfinance2169 thank you very much.
Hi, for 401k how do you calculate amounts taken out if it’s different every pay period? Same for the state and federal the amount taken out is not the same every pay.
I'm not sure that there's an exact formula. But with tax withholding, you don't have to be exactly right, just close enough. The IRS' definition of 'close enough' is in their Form 1040-ES (see links below).
In this case, I might consider averaging the amounts (say 2 or 3 months worth of withholdings), then using that for the estimator.
IRS Form 1040-ES, Estimated Tax Voucher
Article: www.teachmepersonalfinance.com/irs-form-1040-es-instructions/
Video: ua-cam.com/video/MqA_0OX9kxI/v-deo.html
Currently, federal taxes haven't been getting deducted from my checks, and i dont understand why. When i do the estimator, it says i dont need taxes withheld in 2024. This can not be right, and I do not understand what is happening.
I'm not sure what could be happening with your situation, as there could be a number of things. I might suggest doing 2 things:
1. Check last year's tax return to see what Line 24 is. Line 24 represents your total tax, after credits. If the total tax is 0 (or close to 0), then perhaps you actually don't need to withhold taxes (unless something has changed).
2. Perhaps you could try updating your Form W-4 to see whether or not your payroll deductions change. Here is some background information on Form W-4:
IRS Form W-4, Employee’s Withholding Certificate
Article: www.teachmepersonalfinance.com/irs-form-w-4-instructions/
Video: ua-cam.com/video/a7qxsGYLtkU/v-deo.html
My salary is set but my husband's is commission and is a pretty significant amount of his weekly pay check. His commission is paid out over the course of 4 weeks for the month. So it's only predictable for 4 weeks at a time. How would I calculate his income? We really need help with this. We just got hit with an 8k tax bill. I want this corrected for next year. We currently each have married with 2 exemptions and need to update to the new W4. Also, do we give this form to each of our employers?
For yourself, you should be able to enter your W-4, based on the instructions. Once finished, give it to your employer.
For your husband: This might not be so easy. But use your husband's commission income from last year to give you an estimated. This probably is the best that you can do for him. He should give the completed Form W-4 to his employer.
For your overall tax situation: You should be able to use last year's tax return as a proxy for your total income. I would consider calculating your tax liability as a percentage of your income (Line 24 divided by Line 15, which is taxable income). Once you calculate a percentage, then you should make sure that your overall tax withholdings matches that percentage. At the end of each quarter, if your tax withholdings are falling short, then you can either send in Form 1040-ES (see the article/video below), or you can make estimated tax payments to the IRS to make up any difference (watch this video: ua-cam.com/video/GL95tyUlDro/v-deo.html).
IRS Form 1040-ES, Estimated Tax Voucher
Article: www.teachmepersonalfinance.com/irs-form-1040-es-instructions/
Video: ua-cam.com/video/MqA_0OX9kxI/v-deo.html
Do I enter expected commission payments as a lump sum in the "bonus" section? Should I use a Jan 15th paystub from this year in which i haven't received a commission check yet? So as not to throw off employer's current withholding amount? Thank you.
I'm not sure that I can answer this question without knowing how much your commission income is when compared to the rest of your income. If your commissions are a significant amount of your income, and if your commission income is relatively unpredictable, then I would be less inclined to use this tool. But if they're small and relatively insignificant, then you could probably lump everything together and not be that far off. Can you give me a little more context?
Thank you for the reply. Commissions will be around 40% of my overall income.@@teachmepersonalfinance2169
I dont know if im filling out the estimator right. Do you add anything that is excluded from taxable wages like medical benefits and contributions to a 401k ?
You shouldn't have to use excluded income on your withholding estimator.
@@teachmepersonalfinance2169I contribute to a tax deferred 401k plan and I put the amount in the section that asks I contribute to a 401k (Do not include contributions to a Roth 401k) and entered each payroll amount and ytd and the final result tells me to put a amount in 4a other income (not from jobs)..is that correct. Seems odd to me that Its telling me to put an amount in 4a
@@HiroyukiMKido-ti6cu I stand corrected about the 401k contributions. I'm not sure about the other amount area, so I don't know how to guide you. If it won't allow you to move forward without putting any value there, you could always put $1 and move forward.
But you don't need to use the withholding estimator if you don't feel comfortable with it. You could consider getting a copy of your W-4, making some minor adjustments, and waiting to see how that impacts your paychecks.
@@teachmepersonalfinance2169 I'm just trying to figure out why a amount is showing up in 4a when my understanding of 4a is this....For line 4(a), you'll tally up all other taxable income not earned from jobs, including interest, dividends and retirement income.
I don't think my 401k contributions per pay period should be showing up on the final result under 4a. I'm just trying to make sure I don't owe any taxes and having enough taxes taken out. It seems there's forum out there about this same question but no responses but thank you. I guess I'll figure it out eventually.
So how do you reduce your tax refund if you're projected to get too much? the existing tool use to have a slider in which you can reduce the amount, this just shows you what you're projected but not how to reduce it for a lower refund.
You can make adjustments to your pay withholdings (if you're a W-2 employee) by filing Form W-4 with your employer.
on this example, where is the number on step 3 coming from?
So we're on the same page...what number are you specifically asking about? Step 3 (I assume you mean adjustments to income) has a lot of different inputs. Can you clarify?
I just tried this and it said my return was going to be 50K... ummm idk what I'm doing wrong. haha.
It estimates a ridiculously large refund for mine too! I don't get it!!
I believe the calculator is wrong. It needs a heavy update