The purpose of the Tax Withholding Calculator is to help employees calculate income tax that is withheld from their pay. It does not replace the W-4 Form, but most people find it more accurate and easier to use than the worksheets that accompany the W-4. You should try to have your withholding match your actual tax liability. If not enough tax is withheld, you will owe tax at the end of the year and may have to pay interest and a penalty. If too much tax is withheld, you will lose the use of that money until you get your refund.
Who Can Benefit From Using the Income Tax Estimator?
- Employees who would like to change their withholding to reduce their tax refund or their balance due;
- Employees whose situations are only approximated by the worksheets on the paper W-4 Employees with non-wage income in excess of their adjustments and deductions that would prefer to have tax on that income withheld from their paychecks rather than make periodic separate payments through the estimated tax procedures
For a recommendation on your withholding, try the Liberty Tax Withholding Calculator now!