If you weren’t one of the taxpayers caught unaware by a smaller than anticipated tax refund, or worse, received an unexpected tax bill, the IRS has a tool for you.
The agency has done a thorough update and rework of its old online tax-withholding calculator. One advantage of this is you can easily estimate your withholdings even if you are not a single income W-2 wage earner. The IRS recognizes the many ways taxpayers earn income and now attempts to explain the processes of determining the best withholding amount for your household.
If you currently use the calculator, you can make modifications for the remaining months of the year to have more precise withholdings. If you do this right, you can owe a little for taxes next April or even get a small refund, while hopefully enjoying more cash in your regular paycheck. Also, you can relax your nerves when the taxman comes. You can be sure you are on the right track with your taxes.

Purpose for the New Tax Withholding Estimator
Several changes to the tax code caused many individuals to underestimate the tax they owed for 2019. Even though the feds told everyone to do a tax checkup, many were discouraged by the awkward tool provided online. They got a nasty surprise. TCJA threw some curveballs.

• The Act altered tax rates midstream.
• It capped the amount someone could borrow for the aim of home mortgage interest.
• It fixes limits on deductions for state and local taxes.
• And it made exclusions for some types of job-related expenses (like the home office deduction).

The outcome was smaller refunds, unexpected tax bills, and a lot of confusion. To put it lightly, the taxpayers were a furious.
The IRS, unlikely, listened to the People and decided to help out before the same thing occurs again in 2020. The old online calculator that was still based on working patterns of 1950 was taken and updated it to the 21st century.
The IRS also took note of the raging privacy issue that seems to be snowballing by the day. The estimator does not request you to enter any personally identifying information such as your name, social security number, or bank account information. Also, it doesn’t record or save the information you input.

Benefits of the New Estimator
Adhering to the recommended tax checkup is really essential to avoid any more shocks even if you think you have your tax withholding under control. It is very frightening to discover that you owe the IRS money when you were expecting to get a little or more back.
• The new estimator has been improved and works much better than it used to for workers, retirees, self-employed individuals, and dual wage-earner households.
The new design allows you put in pensions and other income separately.
• If you had a major life change such as getting married or divorced, getting a new job, or getting a raise, you certainly need to check on your withholding.
• You get specific recommendations about your withholding for every job and spouse with clear explanations on the next step to take.
• This should be done soon to avoid paying more taxes or incur penalties.

Features of the Estimator
One of the significant features of the new estimator is it offers improved tips and links to assist you in determining if you are eligible for different tax credits and deductions. Everything is offered in language people can actually understand.
Another feature is the estimator is also mobile-friendly. This is great for the generation that can’t seem to do without their smartphones. It also has six different sections and lets you know how far along you are with your data entry work.
There’s a section for household information where you state if you are single, married filing jointly, and so on. You also include your dependents and other necessary information.

The income section has more options to enter different income streams than before.
• Social security benefits
• Scholarship or grant money that you have to declare as income
• Unemployment compensation
• Earned net income from self-employment
• Unearned income from interest, annuities, trust fund distributions, alimony, and dividends
• Earned income from other sources

Then there’s a part that deals adjustments to income. These are tax deductions you can take for income that can’t be taxed. The adjustments include educational expenses, business expenses, and savings accounts like IRAs, medical expenses, and legal obligations.
The deductions from income section offers you the chance to enter taxes paid, charitable gifts, casualty losses, and qualified mortgage interest.
The last two sections are the tax credit section and the results section. The results are the recommendations for making any changes for your withholding and other actions.
With this tax estimator, you can go back and amend errors without starting over. Also, you can choose to skip questions that don’t apply to your tax situation. The results contain specific withholding suggestions for each job, each spouse and also explains what you need to do next in the process.

Documents and Information You Need
You should have several pieces of information available as you work through the estimator:
• Your most recent tax return with a copy of the completed Form 1040
• How much you have withheld for taxes so far this year
• How much you plan to contribute to a 401K plan this year
• How many children you claim for the child tax credit
• An estimate of this year’s income
• The amount of your earned income tax credit
You can choose to enter student loan interest and alimony paid if you want, but those are optional.

What to Do Next
Take the information gotten from the results section and use it for a paycheck checkup. If needed, update your W-4 and give it to your employer as soon you can. If you need to withhold more, you want that to start quickly, so you have more time to pay into the system.
You should have sufficient information to decide if you are withholding enough, too little, or too much. You should be able to fashion the final result to near zero at tax time or, possibly, a small refund.
If you receive a pension, ensure you update your W-4P. If your circumstances change, go through the estimator again with your new information.
There are three ways to adjust your withholding.
• Change the withholding allowances on your W-4 withholding allowances on your W-4.
• Have your employer take an extra flat-dollar amount from each paycheck.
• Pay estimated taxes throughout the year.

Whichever you pick, make sure you do it soon as there’s very little of the year left.

Who Needs to Do This?
The people who need to do this are:
• Taxpayers who itemized previously but will now take the standard deduction
• Two wage-earner households
• Employees with non-wage sources of income (like that passive stream from your popular blog)
• People with difficult tax situations
From the information gathered already, it is advisable you take some time this week to sit down and make sure you have enough withholding to avoid paying a steep bill without giving the IRS more than necessary all through the year.