“All taxpayers should review their federal withholding each year to make sure they’re not having too little or too much tax withheld.”
The next tax season seems far away, but this is actually the perfect time for taxpayers to review their withholding and estimated tax payments. Because federal taxes are pay-as-you-go, it’s important for taxpayers to withhold enough from their paychecks or pay enough in estimated tax. If they don’t, they risk being charged a penalty.
Adjust tax withholding
For employees, withholding is the amount of federal income tax withheld from their paycheck. The amount of income tax an employer withholds from an employee’s regular pay depends on two things:
- The amount they earn.
- The information they give their employer on Form W–4.
All taxpayers should review their federal withholding each year to make sure they’re not having too little or too much tax withheld.