How and Why to Review Your IRS Tax Withholding
The IRS is urging taxpayers to check their federal tax withholding early in the year to avoid unexpected tax bills or large refunds when filing in 2026. With taxes operating on a pay-as-you-go system, adjusting withholding sooner allows individuals to better manage their income, avoid penalties, and potentially increase take-home pay throughout the year.
Use the IRS Tax Withholding Estimator
To help taxpayers stay on track, the IRS offers a free Tax Withholding Estimator. This online tool helps workers, self-employed individuals, and retirees determine whether they have the right amount of federal income tax withheld. Based on the results, individuals may choose to:
- Submit a new Form W-4 to their employer, or
- Update your withholdings to boost your take-home pay rather than waiting for a refund.
Why Review Withholding?
Using the estimator annually—or after major life events like marriage, childbirth, a new job, or home purchase—can help avoid surprises at tax time. It also enables taxpayers to:
- Reduce the risk of owing taxes and penalties
- Align withholdings to match current financial situations
- Avoid over-withholding and receive more money throughout the year
What You’ll Need
Before using the estimator, taxpayers should gather:
- Include all income statements, including your spouse’s if filing jointly
- Information about other income sources (like gig work or investments)
- Most recent tax return(s)
Taxpayers with more complex financial situations—such as those subject to the alternative minimum tax, capital gains, or qualified dividends—may need to refer to IRS Publication 505, Tax Withholding and Estimated Tax, for further guidance. Of course, your W&D advisors are also here to help.
Stay Proactive
The IRS emphasizes that early planning is the best way to avoid filing season surprises. The Tax Withholding Estimator is updated regularly and available year-round at IRS.gov.
Questions?
Please contact your Warady & Davis LLP business advisor with any additional questions or concerns – (847) 267-9600 or [email protected]. Additional information is available in the IRS Tax Withholding Estimator FAQs at IRS.gov.
Source: IRS.gov
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