New IRS tool makes it easier to check your tax withholding
September 13, 2019The IRS has released the new Tax Withholding Estimator, which makes it easier for retirees to pay the correct amount of tax.
This tool helps you tailor the amount of tax withheld from your income to target a tax due amount close to zero or a refund amount.
Also, new features for pension income provide more accurate estimates of withholding, and it even automatically calculates any taxable Social Security benefits.
Use the Tax Withholding Estimator’s recommendations to complete a new Form W-4P, if needed, and give it to your payer.
The IRS encourages everyone to use the Tax Withholding Estimator to perform a quick retirement benefit “checkup.” This is even more important following the recent changes to the tax law for 2018 and beyond.
There are several reasons to check your withholding:
- Helps protect against having too little tax withheld and facing an unexpected tax bill or penalty at tax time next year
- Allows you to adjust your withholding to have less tax withheld up front and receive more in your retirement benefit (The average refund tops $2,800.)
Tips for using the Estimator
The Estimator will ask you to estimate values of your 2019 income, the number of children you will claim for the Child Tax Credit and Earned Income Tax Credit, and other items that will affect your 2019 taxes.
- Gather your most recent pay stubs.
- Have your most recent income tax return handy. A copy of your completed Form 1040 will help you estimate your 2019 income and other characteristics and speed the process.
- Keep in mind that the Estimator’s results will only be as accurate as the information you provide. If your circumstances change during the year, come back to this Estimator to make sure that your withholding is still correct.
- The Tax Withholding Estimator does not ask you to provide sensitive personally-identifiable information like your name, Social Security number, address or bank account numbers. The IRS does not save or record the information you enter on the Estimator.
You can use the results from the Estimator to adjust your income tax withholding. There are two ways to update your tax withholding:
- Log into your TRSL Member Access account, click on the "My Self Service" drop down menu, then select "Change Your Federal Income Tax Withholding."
- Complete and submit to TRSL a new Form W-4P, Withholding Certificate for Pension and Annuity Payment.