Tax estimators are used for estimating tax on different levels. You can use tax estimators to estimate taxes withheld, taxes owed, tax refund, and many more that goes into taxes.
One of the most commonly used tax estimators—tax withholding estimator can be found on the Internal Revenue Service website. It is used for estimating the total amount of federal income tax withheld.
Use this estimator to figure out whether or not you will get a tax refund from the IRS. We suggest using this estimator during the first or second quarter of the year. This way, you can fill out a new Form W-4 to adjust taxes withheld if not satisfied with the outcome.
Click here to use the IRS tax withholding estimator.
Once you’re on the estimator, provide the required information. It usually takes about fifteen minutes to estimate taxes. The tax withholding estimator is made up of five separate parts. In order, you will enter information based on your personal information, income and tax withholding, adjustments to income, deductions you will claim, and tax credits. Once everything is done, you will see the estimation of the amount of taxes withheld.
Want to fill out a new Form W-4 to change the amount of taxes withheld? Start filling out Employee’s Withholding Certificate.
Tax Refund Estimator
The reason why we have such a thing as tax refunds in the United States is because of how we pay taxes. The Internal Revenue Service requires taxpayers to pay taxes gradually instead of paying all at once. While employees do this by withholding tax, self-employed individuals estimate taxes and pay the IRS every quarter.
If the taxes paid during the course of the tax year is more than what’s owed regardless of the method used to pay, the Internal Revenue Service will issue a tax refund. With that said, estimating the amount of a tax refund isn’t something all that complicated.
To begin estimating a tax refund, you first need to know how much you will pay the IRS in taxes. You can figure this out by using the estimator above. After this, estimate the taxes owed to the IRS. If you’re going to use the above tax estimator, you will know taxable income, thus, know the tax rate that applies to you. From there on, you can see how much you are likely to owe the IRS.
Once you put two and two together—what we mean is subtracting the taxes withheld from the amount owed—you will know the remaining taxes owed or the amount you exceeded. If you paid more tax than you owe, you will get the excess amount in your tax refund. If not, you will need to pay the IRS to make up the difference by April 15. (July 15 for 2019 taxes that will be paid in 2020)