Tax Withholding Basics: Estimate How Much You Owe
Introduction
Many Americans are surprised by their tax bill. Understanding withholding helps prevent surprises.
What Is Tax Withholding?
- Employers take money from your paycheck.
- Sent to the IRS as advance payment of your taxes.
W-4 Form
Determines how much is withheld.
Can be adjusted anytime.
Why Use a Withholding Estimator?
- Avoid underpayment penalties.
- Avoid large tax bills.
- Adjust for life changes (marriage, kids, second job).
Tips
- Review withholding yearly.
- Update W-4 after major life events.
- Use IRS tools to estimate.
Sources
Disclaimer: This article is for educational purposes only and does not constitute financial advice.