IRS withholding Tax Estimator

Allow time to complete the new IRS Withholding Tax Estimator. Even though the IRS makes it appear easy, there are still at least 4 parts to complete and may be as many as 6. Have your 2018 1040 handy. Caution: If there will be significant changes from your 2018 to 2019 return, ask a tax preparer for help.

  • Did you marry in 2019?
  • Did you divorce?
  • Did you start or lose a business?

Part I : “About You Do you know if you should be claiming “Head of Household”? If you don’t, that can be a thousand dollar error. This section consists of 9 questions.

Part II : “Income and Withholding. To complete this section, have your last paystub available. You can answer 10, 20, or maybe even 30 fields depending on your Filing Status and Pensions.

Part III : “Adjustments” consist of eight categories, including the Impact of Student Loans, Alimony, and Early Withdrawal Penalties.

Part IV : “Deductionsgives you the chance to input your Itemized Deductions. These include Medicat and Dental Expenses, Taxes Paid, Qualified Mortgage Interest, Gifts to Charity, and more. Did you use your 2018 Itemized Deductions , or what you “Think” this year will be?

Part V : “Tax Creditslist Foreign Tax Credit, Educational, Retirement Savings, Homeowner, and others.

Part VI : “Results” lists whether or not you will need to put more in for taxes.

Don’t hesitate to ask your tax professional for help or to do this for you, If you check the Head of Household Box when you should have checked single, your results may be that you’ll receive a refund, when you should be depositing $1,000 more in taxes. A mistake as this can result in penalties.

If you want to learn about the Alternative Minimum Tax Credit, click on the “?” and the IRS will explain it to you in 2 sentences. Or read about Form 5801 to complete the Prior Year Minimum Tax Credit. These are complex concepts.

The IRS encourages “everyone” to use the Estimator. It is User Friendly, but taxes are not. Using this Estimator if you do not understand what you are doing,  Not depositing the correct amount for taxes can be more costly.

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