USPS and the Internal Revenue Service are encouraging employees to conduct a paycheck checkup to determine whether they need to update their tax withholding for 2020.
Updating federal withholding is especially important for employees who had an unexpectedly high tax bill or a penalty this year.
Similarly, employees who have had a major life change — such as marriage, birth of a child or purchase of a home — might have to adjust their tax withholding.
To ensure the right amount of tax is withheld during the year, employees can use the IRS.gov Tax Withholding Estimator.
The mobile-friendly tool uses a plain language, step-by-step format to enter wages and withholding for each job held by a taxpayer and spouse.
Employees will need their most recent pay statements, information on other sources of income — and, if applicable, a spouse’s income — and most recent income tax return.
The estimator will determine the expected tax withholding and anticipated tax obligation.
The tool also automatically calculates the taxable portion of any Social Security benefits, provides tips to help quickly determine qualifications for tax credits and deductions, and more.
At the end of the process, the tool makes specific withholding recommendations and clearly explains what the taxpayer should do next based on the estimator results.
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