The Internal Revenue Service reminds wage earners to use the Estimate of Tax Withholding Now to adjust 2023 tax withholding . People's tax situations occasionally change through marriage or divorce, the addition of a child, or transfer one on your own. Checking now and making any necessary adjustments early in the year can help you avoid the need for quarterly estimated tax payments.
The online tax withholding estimator tool helps taxpayers see if they can get a refund or need to make a payment directly to the IRS to avoid a tax bill and penalties next year.
Income taxes are paid on the basis of consumption and are typically paid during the year as income is received through payroll withholding, pension payments, National Insurance benefits, or other government payments.
Having a second job or unearned income from unemployment, self-employment, annuity income, the gig economy, or digital assets may require taxpayers to make quarterly estimated tax payments to avoid a balance due at the time of filing.
Also, various financial transactions, especially towards the end of the year, can have an unexpected tax impact. Examples include year-end and vacation bonuses, stock dividends, mutual fund capital gains distributions, and stocks, bonds, virtual currency, real estate, or other assets sold at a profit.
Withholding Tax Estimate
The Tax Withholding Estimator , also available in Spanish, can help employees determine if they have too little or too much withheld. Taxpayers can use the estimate to adjust the amount of tax withheld and submit a new Form W-4, Employee Tax Withholding Certificate , to their employer. The tool offers wage earners step-by-step help in customizing the amount of income tax that should have been withheld from their paycheck.
Make the tax payment
The fastest and easiest way to make an estimated tax payment is to do it electronically using IRS Direct Pay or the Department of Treasury's Electronic Federal Tax Payment System (EFTPS) . For information on other payment options, visit Pay Online . If paying by check, be sure to make it payable to "US Treasury."
Other items may affect your 2023 taxes
Some unforeseen life events can trigger the need to make font adjustments. Here are some tools to help taxpayers know how to adjust for different scenarios:
- Information about your Form W-4, Employee Tax Withholding Certificate, including recent updates, related forms, and instructions on how to file it.
- Coronavirus Tax Breaks – Help for taxpayers, businesses, tax-exempt organizations, and others, including health plans, affected by the coronavirus (COVID-19).
- Disaster Relief and Emergency Relief for Individuals and Businesses : Special provisions of tax law when the federal government declares your location a major disaster area.
- IRS Publication 4128, Tax Impact of Job Loss PDF - Explains how this unfortunate circumstance can create new tax problems.
- Workers Entering the Gig Economy Due to the Pandemic: Advice for people earning income in the gig economy.
- Publication 505, Tax Withholding and Estimated Tax, contains additional details, including worksheets and examples, that may be helpful to those in special situations.