WASHINGTON — The Internal Revenue Service today urged any taxpayer, who is now completing their 2021 tax return, to use the IRS Withholding Tax Estimator to ensure that they receive the correct amount of tax deducted from their salary in 2022.
This online tool
offers workers, self-employed and retirees with wage income a user-friendly resource to effectively adjust the amount of income tax withheld from wages.
2021 reimbursement too high? Too small? Surprise tax bill? If any of these cases apply, the Withholding Tax Estimator can help anyone make sure it doesn’t happen again by withholding the correct amount of taxes for 2022.
Advantages of using the estimator
For employees, the withholding tax is the amount of federal income tax deducted from their salary. Taxpayers can use the results of the Tax Deductions Estimator Tool to determine if they need to complete a new Form W-4 and return it to his employer. For example, verifying retainage can:
- Ensure the correct amount of tax is withheld and avoid an unexpected tax bill or penalty at tax time and
- Determine whether to have less tax withheld up front, thereby increasing take-home pay and reducing any refunds at tax time.
When should taxpayers use this tool?
The IRS recommends checking the withholding at least once a year. For anyone who has just finished filing their 2021 return, now is a particularly good time to do so. It’s also a good idea to use this tool right after a major life change, such as a marriage, divorce, buying a house, or the birth or adoption of a child.
What records are needed?
The results of the withholding tax estimator are only as accurate as the information entered. To help you prepare, the IRS recommends that taxpayers gather:
- Their most recent payslips and, if married, for their spouse,
- Information on other sources of income and
- Their last tax return, 2021, if possible.
Although the Tax Withholding Estimator works for most taxpayers, people with more complex tax situations should instead follow the instructions in Publication 505, Tax Withholding and Estimated Tax. This includes taxpayers who owe alternative minimum tax or certain other taxes, and people with long-term capital gains or qualified dividends.
Still working on a 2021 comeback?
The IRS urges anyone still working on their 2021 return to make sure they have all of their year-end statements on hand before filing. Besides all W-2s and 1099s, this includes two new letters issued by the IRS.
People who have received child tax credit advance payments will need to reconcile or compare the total received in advance with the amount they can claim. Letter 6419 shows the total of their child tax credit advance payments to help taxpayers reconcile and receive the full amount of the Child tax credit 2021.
While most eligible people have already received their stimulus payments, people who miss a third stimulus payment or who received less than the full amount may be eligible to claim a Salvage rebate credit on their 2021 federal income tax return. Letter 6475 shows their third total round of Economic Impact Payments.
Alternatively, anyone can securely log in to their online account to access information about their child tax credit advance payments and economic impact payments.
For most Americans, the tax filing deadline
is April 18, 2022. For residents of Maine and Massachusetts, the deadline is April 19, 2022. Americans living and working abroad have until June 15, 2022. Those who need more time to deposit can get a automatic extension file until October 17, 2022. These extensions do not change the payment deadline of April 18. It is not an extension of Pay. More information is available at IRS.gov.
Then, after filing their return, taxpayers can use the tax withholding estimator to help them update their withholding for 2022.