The IRS says, "All taxpayers should review their federal withholding each year to make sure they're not having too little or too much tax withheld." However, employees may not be aware of the IRS' suggestion, which is why employers should tell them about it.
Are you having the right amount of taxes withheld from your paycheck? You should check at least once a year, or even more frequently if you've had a major life change. Right now, in the aftermath of a pandemic that upended many taxpayers' financial situations, is a good time to check and to make changes to your Form W-4, if necessary.
The rules for withholding federal payroll taxes are quite straightforward, applying to most employees in the United States, regardless of location. The rules tend to be more complicated on the state side, however, as they are location specific and may even include local tax withholding. Here’s a rundown of the various federal, state, and local withholding taxes.
The IRS is urging two-income families and folks who work multiple jobs to complete a paycheck checkup to verify that they're withholding the right amount of tax from their paychecks.
You can check out the IRS Withholding Calculator to help navigate the complexities of multiple employer tax situations and determine the correct amount of tax for each employer to withhold.
The IRS has some advice for you: Review your withholding amount. Why? You just may avoid having too much or too little federal income tax taken from your paycheck. After all, if you have the correct amount withdrawn, you get closer to a zero balance at the end of the year when you file your return — in other words: no taxes owed and no refund due.
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