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| Issue Number: Tax Tip 2022-94What people new to the workforce need to know about income tax withholding For many new grads and other people entering the workforce for the first time, filling out new hire paperwork can be confusing—what's a W-4, anyway? New employees should ensure they understand their tax situation and do some planning now, so they're in good shape at tax time next year. It's important to know the correct amount of tax to withhold. Get tax withholding right. If an employee doesn't have enough tax withheld, they may face an unexpected tax bill and a possible penalty when they file a tax return next year. If they overpay or have too much tax withheld during the year, the employee will likely get a tax refund next year. Adjusting the tax withheld up front may mean a bigger paycheck throughout the year. Form W-4, Employee's Withholding Certificate. In addition to when they start a new job, people can also submit a new W-4 when their personal or financial situation changes, and they want to update their withholding. Taxpayers can use the Tax Withholding Estimator.If a taxpayer isn't sure how much tax they should have withheld, they can use the Tax Withholding Estimator tool on IRS.gov to:
To use the tool, taxpayers need their most recent pay statements or estimated salary, other income totals and their most recent income tax return. The tool doesn't ask for sensitive information such as name, Social Security number, address, or bank account numbers. Not all workers are employees. Keeping tax forms in a safe place.
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