We love technology around here, so when there’s news of new tools that can boost efficiency or help your clients, we’re happy to pass along that information. It turns out that a recent Internal Revenue Service press release highlights something that should help clients burned by under-withholding last filing season: the new-and-improved withholding calculator.
Last Tuesday, the IRS announced a new online tool that they are calling the “IRS Tax Withholding Estimator.” The agency says it will be used in place of the old Withholding Calculator, and they say a number of improvements should better help taxpayers avoid those surprise tax bills.
According to IRS Commissioner Chuck Rettig, “The new estimator takes a new approach and makes it easier for taxpayers to review their withholding.” That new approach consists of the following “user-friendly features” the IRS listed in the press release:
The Tax Withholding Estimator will also let users “enter wages and withholding for each job held by the taxpayer and their spouse, as well as separately entering pensions and other sources of income.” Conveniently, the IRS says the estimator uses that case-by-case information to suggest how much should be withheld and the next step in the process.
The IRS closed the press release by confirming what many tax professionals reported throughout the tax year 2018 tax season: “Those most at risk of having too little tax withheld include those who itemized in the past but now take the increased standard deduction, as well as two-wage-earner households, employees with nonwage sources of income, and those with complex tax situations.”
While having clients schedule a tax consultation with your office is probably the best course of action, it’s always a good idea to have another tool in your utility belt for helping them navigate their tax liability. Aside from advertising the Tax Withholding Estimator, the release linked a PDF that lists the four steps for adjusting withholding: “Tax Withholding Estimator Infographic.”