Check Your Withholding

January 25, 2021

Are you giving Uncle Sam an interest-free loan? Worse yet, are you incurring a penalty? Withholding the correct amount of income tax from your paycheck is always important. In an increasingly uncertain economy, it is also far more difficult. If you have multiple jobs, work irregular hours, or change the number of dependents you claim, the amount of tax normally withheld may be incorrect.

• If you are withholding too much from your paycheck, it will eventually be refunded to you – but only at face value. The IRS does not pay interest on overpayments.
• If you are withholding too little, you could get hit with a larger-than-expected tax bill that includes penalties and interest.

Whether your financial situation has recently changed or you simply want to double-check that everything is correct, visit the Internal Revenue Service’s “Tax Withholding Estimator” to learn how much tax should be withheld.

https://apps.irs.gov/app/tax-withholding-estimator