Few things are worse than an unexpected tax bill. If you’re still reeling from a recent tax surprise—or if the upheaval of the past few months has changed your personal circumstances—it may be the perfect time to perform a mid-year checkup of your federal withholding. One way to eliminate the guesswork is by completing a Paycheck Checkup through the IRS—which will show you if your employer isn’t withholding enough from your paycheck.
According to the IRS, it’s especially important to complete a Paycheck Checkup if you have recently had a major life change—like getting married, having a baby, adopting a child or buying a home—which may impact your taxes.
The IRS also says certain taxpayers—like two-income families, those working seasonal jobs or those who itemize tax deductions, for example—may be more prone to withholding the wrong amount.
What you need for Paycheck Checkup
Before getting started, you’ll want to have a few things handy—paystubs for you and your spouse, paperwork for each source of income and your most recent tax return. Once you have these documents, watch this step-by-step tutorial video before beginning the Tax Withholding Estimator.
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There are five steps to complete the Tax Withholding Estimator. You’ll enter some basic details about your filing status, income and withholding, income adjustments, tax deductions and tax credits. The more details you’re able to provide, the more accurate your results will be. If you get stuck in the middle of the process, you may find the answer to your questions here.
How to change your withholding
If you discover something is wrong, you can use the results from the Tax Withholding Estimator to complete a new Form W-4—aka your Employee’s Withholding Certificate—and submit it to your employer as soon as possible, as the change may not take immediate affect. After you do, keep an eye on your paychecks in the coming weeks to make sure the change has been applied properly.
