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Now that you’ve filed, do you need to tell your employer to withhold more or less income to pay your 2020 taxes?
|Was your refund lower than expected, or did you have an unexpected tax bill when you filed this year? You can take steps today to make sure your federal income tax withholding is on the right track for this year.|
Checking your withholding at the beginning of the year helps ensure you don’t have too little or too much withheld from your paychecks throughout the year. This is especially important if you changed your withholding in 2020. A mid-year withholding change can have a different full-year impact in 2021. You should also check your withholding any time your personal or financial information changes. Use the Withholding Calculator to help you decide whether you need to change your withholding.
Federal taxes operate on a pay-as-you-go basis. This means that you need to pay most of your tax during the year, as you earn the income.
Paying too much tax throughout the year will result in a refund while not paying enough can lead to a tax bill, penalties and interest when you file. One way to avoid owing a balance is to correctly calculate and adjust how much tax you should have withheld from your wages. Use the Withholding Calculator to help you decide whether you need to change your withholding.
Another option is to consider making quarterly estimated tax payments. Those who don’t pay taxes through withholding, or don’t pay enough tax that way, may still use the Withholding Calculator to determine if they have to pay estimated tax quarterly during the year to the IRS. Those who are self-employed generally pay tax this way. See Form 1040-ES, Estimated Taxes for Individuals, for details.
Visit IRS.gov/payasyougo to learn more about withholding and to determine if you should be making estimated tax payments.
You are in the driver’s seat. Check your withholding today.