IRS W4 App, also known as the IRS Tax Withholding Estimator is a way for you to see how much tax you’re expected to withhold during the tax year and compare it with the anticipated tax liability. If you’re withholding too much or too little tax for your tax liability, you get a heads up on this by using the IRS W4 app.
The app works simply by providing the tool with certain information about your income. adjustments to income, deductions, and credits so that your anticipated tax liability can be figured out. The next step is to enter information about withholding and after all things come together, you will see a comparison of the two.
If you need to withhold more tax, you will know exactly how much so and if you’re withholding tax excessively, you’ll know about that too.
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One thing to know before using the tax withholding estimator to figure out how your tax withholding looks, enter the information about withholding as shown on your Form W-4. The reason for this is because your employer uses it to determine how much tax to withhold.
Taxpayers who’ve had changes to their federal income tax returns should file a new Form W-4 to let their employers know about them so that the tax withheld is accurate. Situations like this where you should file a new Form W-4 is as follows.
- changes in filing status
- having a child
- significant increase or decrease in income earned
- picking up a second (or even a third) job
The above list of life events can affect the tax withheld dramatically. So a new Form W-4 should be filed to let your employer know about these changes. The outcome of this is the tax withheld is enough to cover your tax bill but not excessive in a way that you’re loaning your money away to the IRS.