Now more than ever the IRS is encouraging everyone to do a quick "paycheck checkup". To help with this task the IRS provides a Withholding Calculator tool so that you can identify the proper amount of tax to be withheld from your paycheck. As per the IRS, there are several reasons to check your withholding which include:
"Checking your withholding can help protect against having too little tax withheld and facing an unexpected tax bill or penalty at tax time next year. "
"At the same time, with the average refund topping $2,800, you may prefer to have less tax withheld up front and receive more in your paychecks."
The process only takes a few minutes and you'll want to have your most recent paystubs and tax return to ensure an accurate result.
If your circumstances change during the year, you should come back to this Calculator to make sure that your withholding is still correct. The IRS does not save or record the information you enter on the Calculator.
It's also important to remember that for complex tax situations, the IRS recommends following the instructions in Publication 505.
To change your withholding, use the results from the calculator to complete a new W-4 and give the updated W-4 to your employer.