IRS Urges Taxpayers to Use IRS’ Tax Withholding Estimator Tool
As many people have heard in the news, the IRS has admitted that 2022 was another tough filing season with a large backlog of tax returns that are unprocessed and the Internal Revenue Service (IRS) phone lines for customer service being difficult to access an agent. However, the IRS has updated tools for taxpayers and one that employees and employers should be aware of is the new IRS tax withholding estimator tool on the irs.gov website.
When an onboarded employee who is paid via W-2 starts work, they will be required to fill out payroll withholding forms so the employer knows how much tax to withhold from each paycheck. This involves filling out a W-4 form, checking a few boxes, and hoping you are paying the correct amount to avoid a large over or underpayment during the tax filing season. It is cumbersome to know exactly how much that would be and you likely won't find out until you receive your first paycheck. If it is greater or less than what you expected, the employee must go back and file a new form with the payroll department.
With this new tool, you have a much better chance of avoiding surprises after year end when you file your tax return and see that you paid too much or too little tax. It is interactive and user friendly no matter what your knowledge of personal taxation is. This is a great tool for taxpayers who do not want surprises when going to file their return, do not want to spend hours trying to figure out the situation themselves or pay others for answers.
Feel free to reach out with questions if you started a new job during 2022 or had a surprise during the past tax filing season.